Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

CFP > BCC Case Prep > Flashcards

BCC Case Prep Flashcards

1
Q

What is regular occupation?

A

Most used definition. Provides benefit as long as insured can’t do a job that doesn’t fit their range of skills

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

What is own occupation?

A

Most generous. As long as you can’t do your job, you’ll get the benefit. Ex. Surgeon

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

What is any occupation?

A

Most restrictive. No benefits if you can do any job you are qualified for. Normally used in lower occupations.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

What are some benefits of the RDSP

A

-Free bonds
-tax splitting from parents to child
-beneficiary might not be able to save on their own
-will not interfere with provincial
Benefits

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

How are gains on stock options a treated?

A

Same as capital gains, but Proceeds-ACB(which is purchase price plus benefit) then had 50% stock deduction

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

What are the benefits of divesting stock options?

A

Diversification, locking in a gain

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

What happens when you transfer a corporate policy to personal ownership?

A

Policy is taxable as passive income to corporation (CSV-ACB)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

What is the taxable gain for the individual when transferring a policy from corporation to individual?

A

Taxed as shareholders benefit on FMV. Unless he put any amount towards it then that would reduce the benefit.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

What assets are hard to categorize?

A
  • CSV
  • balanced mutual funds/ETFs
  • preferred shares
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

How do you calculate the real rate of return?

A

Return-inflation/

1+inflation

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

What does Assuris cover for disability benefits?

A

85% when benefit is higher than 2000/m.

-Covers the higher amount

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

How do tax credits on charitable donations work?

A

15% on first $200
29% on amount above
-can be carried forward up to 5 years

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

How do you determine the medical expense deduction?

A

The lesser of the max or 3% of your income

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

What are the key considerations of a spousal Loan?

A
  • need a loan agreement (in case of marital breakdown)
  • must charge CRA prescribed interest rate
  • person getting funds can deduct interest
  • person receiving interest would include it as income
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

How to calculate taxes/credit on dividend?

A 
-dividend is paid
Dividend is grossed up
Tax paid on dividend (MTR)
Dividend tax credit applied on grosses up amount 
After tax return (tax-credit)
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

What does LTD’s benefit calculation include?

A

Salary only, not dividends

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

What does LTD all-sources maximum mean?

A

If the plan is not taxable: take after tax monthly income and x 85% =can’t go Over this amount

18
Q

How does someone who has a corp obtain more disability insurance?

A
  • Replace dividends with salary.
  • replace group plan with individual coverage
  • change to an insurer that would cover dividends
19
Q

What event would require a buyout?

A
  • death
  • disability or illness
  • failure to perform
  • morals
  • loss of capacity
  • marital breakdown
  • personal bankruptcy
20
Q

Why is purchase price valuation important in a buy sell agreement?

A

To get proper valuation of the business. Hire CBV to value.

21
Q

Why is timing of purchase important in a buy sell agreement

A

Makes it clean and sets a common timing for certain events

22
Q

Why is source of funds important in a buy sell agreement

A

To determine where the funds will come from. Insurance, loan agreement, third party borrowing

23
Q

Why is tax handling important in a buy sell agreement

A

The amount paid to the departing shareholder can be from capital dividend, eligible, non Eligible, return of capital

24
Q

What happens when you transfer property into a trust?

A

Think of it as if there’s no trust:
-if it’s staying in the control of the same person: no tax
-if there’s an opportunity for a spousal rollover: no tax
Needs to be over 65

25
Q

What’s the 21 year rule?

A

All capital property is deemed to be disposed.

If you’re over 65 this doesn’t apply

26
Q

What happens when the last interest beneficiary dies in the trust?

A

The trust pays tax on the last deceased on their terminal return

27
Q

What happens to the death benefit of life insurance paid to the trust?

A

Paid out to beneficiary tax free

28
Q

What is income interest in a trust?

A

When a beneficiary receives income generated in the trust

29
Q

What is capital interest in the trust?

A

Gives the beneficiary the right to the capital in the trust. Cars, buildings, bank account

30
Q

What is life interest in a trust?

A

Beneficiary has access to to the funds in the trust during their lifetime.

31
Q

What is remainder interest in a trust?

A

A beneficiary only has access to the funds if the beneficiaries with life interests have died

32
Q

How do the grants work for an RESP?

A
  • 2,500 contribution gets 20% ($500)
  • for additional grants:
  • if income is less than 100k, it’s 30% on first 500, and 20% on next 2000
  • if income is less than 50k, it’s 40% on first 500 and 20% on next 2000
33
Q

How do grants work for RDSP?

A

Family net income over 100k=100% so 1000 gets 1000
-family net income less than 100k, 300% on first 500
And 200% on next 1,000

34
Q

When do you normally use BGN ‘mode for TVM?

A

Lease payments, mortgages

35
Q

What are the financial planning steps?

A
  1. Letter of engagement
  2. Discovery
  3. Calculate retirement needs
  4. Recommend products
36
Q

How do you calculate GDS?

A

Mortgage or rent + property taxes+heating+50% condo fees/gross monthly family income

-upper limit is about 30-35%

37
Q

How do you calculate TDS?

A

Debt payments+car payments+same as GDS/family net monthly income

38
Q

How to calculate how much salary you need for a net amount?

A

Net amount/(1-tax rate)

39
Q

What are the rates of depreciation for passenger vehicles, buildings, and most other things?

A

30%
4%
8%

40
Q

What is the Canada learning bond for an RESP?

A

Modest family income

  • max 2000 per child
  • for children born 2004 or later
  • 500 when the account is opened and 100 per year until child turns 15
41
Q

What are some benefits to a fixed rate mortgage?

A
  • More terms available

- eliminate interest rate risk

42
Q

What are some benefits of variable rate mortgages?

A

Usually less expensive as more is paid towards principal

-has option to convert to fixed

CFP (12 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions