LLQP Segregated Funds & Annuities · Component 1.1 · 35% of the exam
A client returning to Canada after a decade abroad asks about opening a TFSA. The agent should confirm:
- AThat she has held a Canadian bank account throughout, since that is the test for TFSA eligibility
- BThat the years abroad accrued contribution room, since room accumulates for every Canadian citizen
- CThat she waits five years after returning before contributing, since returning residents face a delay
- That she has re-established Canadian residency, since room does not accrue for non-residents
Correct answer: D) That she has re-established Canadian residency, since room does not accrue for non-residents
TFSA contribution room accrues only for the years in which a person is resident in Canada, so a long absence leaves a gap the client may not expect.
Why the other options are wrong
- AHolding a bank account is irrelevant to TFSA eligibility.
- BCitizenship does not create room; residency does.
- CNo waiting period applies to a returning resident.
Exam tip
TFSA room follows residency, not citizenship.
Common mistake
Calculating room from the year a client turned eighteen regardless of residency.
What this tests
CISRO competency component 1.1 — Assess the client's needs and situation — which is weighted at 35% of the Segregated Funds & Annuities module. Written against the published curriculum.
More from component 1
- The first step before recommending a segregated fund or annuity is to:
- A client's 'time horizon' for an investment is:
- 'Risk tolerance' in an investor profile refers to:
- A client says he wants 'high returns with no risk of losing money'. The agent should:
- Investment objectives are commonly classified as:
- Why is the client's marginal tax rate relevant to a segregated fund recommendation?
Practice the whole Segregated Funds & Annuities module
Timed sets weighted like the exam, and review of every question you miss. Free to start.