Tax and Retirement Planning Flashcards
7 cards from real IFC practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Tax and Retirement Planning flashcards as text
A client transfers mutual fund units from a non-registered account into their RRSP. Which tax consequence applies?
Answer: The transfer is deemed a disposition at fair market value, triggering any accrued capital gain or loss
Contributing securities in-kind to an RRSP triggers a deemed disposition at fair market value, realizing any accrued capital gain (but losses are denied).
Which of the following best describes the Lifetime Capital Gains Exemption (LCGE)?
Answer: It provides an exemption on gains from qualified small business corporation shares and qualified farm/fishing property
The LCGE shelters capital gains on qualified small business corporation shares and qualified farm or fishing property, up to an indexed lifetime limit.
What is the purpose of pension adjustment (PA) on a T4 slip?
Answer: It reduces RRSP contribution room to prevent double-dipping on retirement tax shelters
The PA reduces an employee's RRSP contribution room to reflect the tax-assisted pension benefits accruing through an employer pension plan.
An investor holds a mutual fund in a non-registered account and receives an annual distribution. Which statement is TRUE?
Answer: Distributions retain their character (interest, dividends, capital gains) and are taxed accordingly
Mutual fund distributions flow through to unitholders with their original tax character — interest, Canadian dividends, foreign dividends, or capital gains.
Under the Lifelong Learning Plan (LLP), how much can an RRSP holder withdraw annually to fund full-time education?
Answer: $10,000 per year up to a $20,000 lifetime maximum
Under the LLP, an individual may withdraw up to $10,000 per year, to a maximum of $20,000 in total, from their RRSP for qualifying full-time education.
A retiree wants to minimize OAS clawback. Which strategy is MOST effective?
Answer: Drawing down non-registered investments before registered accounts to manage net income
Strategically drawing from non-registered sources (which may include return of capital) before triggering large registered income can keep net income below the OAS clawback threshold.
Which of the following correctly describes a group RRSP?
Answer: An employer-administered collection of individual RRSPs where employees make contributions, sometimes matched by the employer
A group RRSP is a collection of individual employee RRSPs administered by the employer, often with employer matching contributions.