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QAFP > RRSPs And TFSAs > Flashcards

RRSPs And TFSAs Flashcards

1
Q

When does HBP need to be paid back

A

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

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2
Q

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

A

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

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3
Q

What amount does OAS clawback star and what is the clawback

A

$77,580

$0.15 for every $1 above threshold

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4
Q

Whan is OAS fully clawback

A

$125,937

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5
Q

What is over contribution of RRSP called

A

CEA cumulative excess amount (-$2k allowable)

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6
Q

What happens if client over contributes to RRSP

A
  • 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  • CEA will be taxable when withdrawn, resulting in double taxation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
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7
Q

How to calculate CEA penalty

A

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

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8
Q

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

A

T1 - OVP

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9
Q

Formula for inflation adjusted ret

A

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

% turned into decimal

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10
Q

Requirements for first time home buyers

A

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

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11
Q

Can the four year qualification period be waived for HBP

A

If disabled client or relatives buying for them

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12
Q

Can RSP contributions be made the year of HBP withdrawal

A

Only over 90 days before

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13
Q

What are the stipulations for HBP

A
  • 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
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14
Q

HBP repayments

A
  • over15 year

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

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15
Q

Situation than shorten HBP repayment

A

Death
Relocation outside Canada
Turning 71

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16
Q

What happens when a HBP client dies

A
  • balance owing added to income in year of death

- if spouse, they can take over repayment

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17
Q

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

A

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

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18
Q

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

A

Cancel participation

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

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19
Q

What happens when HBP participant turns 71

A

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

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20
Q

Under what circumstances can clients cancel HBP. 3

A

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

21
Q

Specific steps to cancel HBP. 3

A

Make cancellation payment to RRSP

write CRA explaining reason or form RC471

Send letter/form with payment receipt to CRA

22
Q

When are HBP cancelation payments due

A

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

23
Q

Requirements for LLP withdrawal

A

Full time training or education

  • if disabled, can be part time
24
Q

LLP allowable withdrawal amount

A

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

25
Q

When does LLP require payment

A

Over 10 years

1st is due 60 days after5th year following first withdrawal

26
Q

Who is the participant in LLP

A

RRSP owner

27
Q

Education and institution requirements for LLP

A

Qualified education programs-

Designated education institution

28
Q

What is a qualified education program for LLP

A

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

29
Q

What is a designated education institution for LLP

A

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

30
Q

Qualifying conditions for LLP withdrawal 4

A

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

31
Q

Exceptions for LLP for disabled

A

Don’t have to do 10 hours a week

32
Q

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

A

Qualify for disability tax credit

Letter sign by doctor

33
Q

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

A

Schedule 7

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

34
Q

Circumstances when LLP payment are shortened 4

A

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

35
Q

Options when LLP participant turns 71. 3

A

Repay during 71st year

Partial payment, remaining scheduled payments paid as income for rest of term

No payment, income in future years

36
Q

If student does not complete education for LLP

A

Amount needs to be recontributed or included on income

37
Q

Circumstances to cancel LLP 3

A

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

38
Q

Canceling LLP withdrawal 3

A

Repay to RRSP

send detailed letter to CRA

send letter and receipt to CRA

39
Q

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

A

T2220

40
Q

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

A
  • T2220
  • file form along with separation agreement I
    With ministers of national revenue within 30 days
41
Q

What is retirement allowance compromised of

A

Unused sick leave or damages from wrongful dismissal

42
Q

Maximum amount of eligible retirement allowance 2

A

$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

43
Q

Is a retirement allowance taxable

A

No it is transferred to RRSP deferred

44
Q

Important factors regarding retirement allowance

A

Cannot got to spousal RRSP

Transfer has to go in when client is 71 or younger

45
Q

Non eligible portion of retirement allowance options

A

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

46
Q

What is requirement of qualified beneficiaries 2

A

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

47
Q

What is the over contribution fee for a TFSA

A

1% per month

48
Q

What is form RC243-P

A

Form to show how TFSA over contributions are calculated

49
Q

2 options for clients that receive TFSA over contributions package

A

Sign, date and pay penalty

Write letter to CRA

QAFP (12 decks)

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