RRSPs And TFSAs

Question 1

When does HBP need to be paid back

Answer 1

Second year following withdrawal or by March 1st of 3rd year

Question 2

In the year a client dies can a legal representative make an RRSP contribution

Answer 2

Yes, it can be made to surviving spouses RRSP in year of death and 1st 60 days

Question 3

What amount does OAS clawback star and what is the clawback

Answer 3

$77,580

$0.15 for every $1 above threshold

Question 4

Whan is OAS fully clawback

Answer 4

$125,937

Question 5

What is over contribution of RRSP called

Answer 5

CEA cumulative excess amount (-$2k allowable)

Question 6

What happens if client over contributes to RRSP

Answer 6

• cannot be deducted for taxes
• can remain in RSP and earn tax deferred investment income
• CEA will be taxable when withdrawn, resulting in double taxation
• but if no contribution made in following year, can become tax deductible
• penalty of 1% per month payable within 90 days of end of year

Question 7

How to calculate CEA penalty

Answer 7

Total undeductible RRSP contributions after 1990 - clients unused RRSP contribution room + $2,000

Question 8

Form to complete if you’ve over contributed to your RRSP

Answer 8

T1 - OVP

Question 9

Formula for inflation adjusted ret

Answer 9

= (1 + return/ 1 + inflation) - 1

% turned into decimal

Question 10

Requirements for first time home buyers

Answer 10

Not owned or lived in a home in the four calendar years preceding the year of withdrawal

Question 11

Can the four year qualification period be waived for HBP

Answer 11

If disabled client or relatives buying for them

Question 12

Can RSP contributions be made the year of HBP withdrawal

Answer 12

Only over 90 days before

Question 13

What are the stipulations for HBP

Answer 13

• purchased in Canada
• occupy as PR within one year of purchase
• ## home must be purchased and built before October 1 of the year following withdrawal

Question 14

HBP repayments

Answer 14

• over15 year

- must begin no later than the second year following the withdrawal, or by March 1st of third year

Question 15

Situation than shorten HBP repayment

Answer 15

Death
Relocation outside Canada
Turning 71

Question 16

What happens when a HBP client dies

Answer 16

• balance owing added to income in year of death

- if spouse, they can take over repayment

Question 17

What happens when HBP has already bought or built a home and moves out of Canada 2 options

Answer 17

Repay remaining before income tax for year becoming anon resident or60 days after, whatever is earlier

List amount on line 129 as income for year

Question 18

What happens when a HBP took funds out but have not bought or built before becoming a non resident 2 option

Answer 18

Cancel participation

Repay, must be done by December 31 of year after the year the funds were withdrawn

Question 19

What happens when HBP participant turns 71

Answer 19

No further payments allowed after year they turn 71, unpaid amount included as income as scheduled payments are due

Can also repay in year turns 71

Question 20

Under what circumstances can clients cancel HBP. 3

Answer 20

Decided not to buy or build

Becomes non resident before buying or build

Funds were drawn for disabled, they have changed mind or moved out of Canada

Question 21

Specific steps to cancel HBP. 3

Answer 21

Make cancellation payment to RRSP

write CRA explaining reason or form RC471

Send letter/form with payment receipt to CRA

Question 22

When are HBP cancelation payments due

Answer 22

End of next year afterHBP funds received or by filing date of income tax for year funds received

Question 23

Requirements for LLP withdrawal

Answer 23

Full time training or education

• if disabled, can be part time

Question 24

LLP allowable withdrawal amount

Answer 24

Up to $10k per year over 4 years, maximum is $20k

Question 25

When does LLP require payment

Answer 25

Over 10 years 1st is due 60 days after5th year following first withdrawal

Question 26

Who is the participant in LLP

Answer 26

RRSP owner

Question 27

Education and institution requirements for LLP

Answer 27

Qualified education programs- | Designated education institution

Question 28

What is a qualified education program for LLP

Answer 28

Post secondary level or certified by ESDC for trades Must last 3 consecutive months 10 hours a week in class or working in program

Question 29

What is a designated education institution for LLP

Answer 29

University and college in Canada ESDC certified trades University outside Canada leading to BA, must be 3 weeks Us post secondary school with student commuting over the boarder

Question 30

Qualifying conditions for LLP withdrawal 4

Answer 30

Have RRSP enrolled full time in appropriate school, must be registered by March of following year Canadian resident Must not have begun making repayments for withdrawal made in previous year

Question 31

Exceptions for LLP for disabled

Answer 31

Don’t have to do 10 hours a week

Question 32

To meet disability requirements for LLP have to have 2 things.

Answer 32

Qualify for disability tax credit | Letter sign by doctor

Question 33

For HBP and LLP repayment, what form needs to be done

Answer 33

Schedule 7 Section A is contribution made, B is amount designated to LLP

Question 34

Circumstances when LLP payment are shortened 4

Answer 34

Death Turn 71 Becomes non resident Leaves school or doesn’t enrol in timw

Question 35

Options when LLP participant turns 71. 3

Answer 35

Repay during 71st year Partial payment, remaining scheduled payments paid as income for rest of term No payment, income in future years

Question 36

If student does not complete education for LLP

Answer 36

Amount needs to be recontributed or included on income

Question 37

Circumstances to cancel LLP 3

Answer 37

Did not enrol by March deadline Left program before April after withdrawal or 75% of tuition refundable Student becomes nonresident before end of year in which LLP was withdrawn

Question 38

Canceling LLP withdrawal 3

Answer 38

Repay to RRSP send detailed letter to CRA send letter and receipt to CRA

Question 39

What form is used to transfer an RSP due to marriage break

Answer 39

T2220

Question 40

What does the financial institution have to do when transferring RSP due to marriage breakdown

Answer 40

- T2220 - file form along with separation agreement I With ministers of national revenue within 30 days

Question 41

What is retirement allowance compromised of

Answer 41

Unused sick leave or damages from wrongful dismissal

Question 42

Maximum amount of eligible retirement allowance 2

Answer 42

$2k for each year ,or part year, of employment before 1996 $1500 for each year before 1989, provided employee was not member of PP or DPSP, otherwise, only amounts not yet vested apply

Question 43

Is a retirement allowance taxable

Answer 43

No it is transferred to RRSP deferred

Question 44

Important factors regarding retirement allowance

Answer 44

Cannot got to spousal RRSP | Transfer has to go in when client is 71 or younger

Question 45

Non eligible portion of retirement allowance options

Answer 45

If room, can be contributed Transfer to spousal account Transfer to RRSP to avoid withholding tax

Question 46

What is requirement of qualified beneficiaries 2

Answer 46

Net income less than the basic personal amount for the previous year Impaired physical or mental and previous years let income equal or less than personal basic plus disability amount

Question 47

What is the over contribution fee for a TFSA

Answer 47

1% per month

Question 48

What is form RC243-P

Answer 48

Form to show how TFSA over contributions are calculated

Question 49

2 options for clients that receive TFSA over contributions package

Answer 49

Sign, date and pay penalty Write letter to CRA