LLQP Segregated Funds & Annuities · Component 3.1 · 25% of the exam
A recommendation for a corporation investing surplus cash in segregated funds should address:
- ANothing special, since a corporation is taxed on investment income in the same way as an individual
- BThe owner's personal RRSP room, since the corporation's deposit can be deducted against the owner's income
- CThe GIS clawback, since corporate investment income is attributed to the shareholder for benefit purposes
- Corporate taxation of investment income, limited creditor protection, and corporate signing and beneficiary rules
Correct answer: D) Corporate taxation of investment income, limited creditor protection, and corporate signing and beneficiary rules
Corporate investing has its own tax regime. Coordination with the accountant is expected.
Why the other options are wrong
- ACorporate rules differ from personal ones.
- BRRSP room is personal and cannot be used by a corporation.
- CGIS clawback is a personal benefit issue irrelevant to a corporation.
Exam tip
Corporate seg funds: passive income tax, CDA, limited creditor protection.
Common mistake
Applying personal tax rules to a corporate contract.
What this tests
CISRO competency component 3.1 — Implement a recommendation adapted to the client's needs and situation — which is weighted at 25% of the Segregated Funds & Annuities module. Written against the published curriculum.
More from component 3
- A client's spouse must sign for:
- When the insurer requests additional information after the application (for example, source of wealth for a large deposit), the agent should:
- The implementation of a recommendation involving a switch from one seg fund to another within a contract requires:
- A client wishes to designate a charity as beneficiary of a segregated fund. Implementation should:
- For a deferred annuity implemented for a client, the agent should confirm:
- The agent's record of the implementation should be retained:
Practice the whole Segregated Funds & Annuities module
Timed sets weighted like the exam, and review of every question you miss. Free to start.