SEGREGATED FUNDS AND ANNUITIES
CERTIFICATION (SFA) EXAM
Canadian Pension Plan Benefits: ANSWER CPP Income Formula = 8.4%
yearly tax x number of years x CPP at age 65
The formula for calculating RRSP contributions is income multiplied by 18%.
Market-linked GIC - ANSWER A market-linked GIC has an interest rate that is
connected to the performance of the stock market, which allows for a greater
interest rate in the event of favorable market returns. While the returns are
capped, there is the possibility of higher interest than with other GIC products.
CASHABLE GIC - ANSWER Cashable GICs allow consumers to withdraw
their money at any time, but they have a lower interest rate than fixed-rate
GICs.
Foreign Dividends: ANSWER Foreign dividends are treated as interest and
taxed at his marginal rate. Only Canadian dividends are eligible for the dividend
tax credit. The dividend tax credit makes Canadian dividends more tax-efficient
than overseas payouts.
Annuity Advantages - Annuities offer advantages such as not having to worry
about outliving one's money when purchasing a life or joint and survivor
annuity. I
If the annuity is prescribed, less tax may be owed in the first years of payment.
Only an annuity is guaranteed for life and can mitigate longevity risk.
Canadian Investor Protection Fund (CIPF) - Answer The Canadian Investor
Protection Fund (CIPF) protects stock investors in the event of a dealer's
insolvency.
CERTIFICATION (SFA) EXAM
Canadian Pension Plan Benefits: ANSWER CPP Income Formula = 8.4%
yearly tax x number of years x CPP at age 65
The formula for calculating RRSP contributions is income multiplied by 18%.
Market-linked GIC - ANSWER A market-linked GIC has an interest rate that is
connected to the performance of the stock market, which allows for a greater
interest rate in the event of favorable market returns. While the returns are
capped, there is the possibility of higher interest than with other GIC products.
CASHABLE GIC - ANSWER Cashable GICs allow consumers to withdraw
their money at any time, but they have a lower interest rate than fixed-rate
GICs.
Foreign Dividends: ANSWER Foreign dividends are treated as interest and
taxed at his marginal rate. Only Canadian dividends are eligible for the dividend
tax credit. The dividend tax credit makes Canadian dividends more tax-efficient
than overseas payouts.
Annuity Advantages - Annuities offer advantages such as not having to worry
about outliving one's money when purchasing a life or joint and survivor
annuity. I
If the annuity is prescribed, less tax may be owed in the first years of payment.
Only an annuity is guaranteed for life and can mitigate longevity risk.
Canadian Investor Protection Fund (CIPF) - Answer The Canadian Investor
Protection Fund (CIPF) protects stock investors in the event of a dealer's
insolvency.
