LLQP Segregated Funds & Annuities · Component 1.3 · 35% of the exam
A client's need to defer tax on non-registered savings can be met by:
- ANothing, since all investment income outside a registered plan is taxed in the year it is earned
- BA RRIF, since it shelters non-registered savings from tax until the money is withdrawn
- CInterest-bearing deposits, since interest is taxed only when the deposit matures
- Growth investments with deferred gains, corporate-class structures, and TFSA room first
Correct answer: D) Growth investments with deferred gains, corporate-class structures, and TFSA room first
Tax deferral outside registered plans comes from unrealized gains. Interest is the least efficient income.
Why the other options are wrong
- ADeferral strategies exist for non-registered money.
- BRRIFs hold registered money and produce taxable income.
- CInterest is taxed annually at full rates.
Exam tip
Non-registered deferral: capital gains, TFSA first.
Common mistake
Holding interest-heavy funds non-registered while equity sits in the RRSP.
What this tests
CISRO competency component 1.3 — 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
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