LLQP Segregated Funds & Annuities · Component 2.3 · 30% of the exam
A sixty-six-year-old client asks whether annuity income qualifies for the pension income tax credit. The agent should explain that:
- registered annuity income qualifies from age sixty-five, and the client should confirm details with a tax adviser
- Bonly annuity income received before age sixty-five qualifies for the credit in any province
- Cthe credit applies only when the annuity was purchased with money from a group pension plan
- Dno annuity income qualifies for the credit under any circumstances or at any age
Correct answer: A) registered annuity income qualifies from age sixty-five, and the client should confirm details with a tax adviser
Payments from a registered annuity or income fund generally qualify for the pension income amount from age sixty-five, and may also support pension income splitting with a spouse. The agent should flag the point and refer detailed planning to a tax professional.
Why the other options are wrong
- BFor these sources the credit generally starts at age sixty-five, not before it.
- CSources beyond an employer pension can qualify once the age condition is met.
- DQualifying pension income does include payments from registered annuities at that age.
Exam tip
Flag the pension income amount at sixty-five, then refer the details to a tax adviser.
Common mistake
Giving detailed tax advice instead of identifying the issue and referring it on.
What this tests
CISRO competency component 2.3 — Analyze the available products that meet the client's needs — which is weighted at 30% of the Segregated Funds & Annuities module. Written against the published curriculum.
More from component 2
- A segregated fund's 'guaranteed amount' after a partial withdrawal under proportional reduction is:
- A distinctive estate advantage of a segregated fund over a non-registered mutual fund held jointly with a child is:
- Segregated fund guarantees are most valuable relative to their cost when:
- A segregated fund's annual statement reports:
- Compared with a segregated fund, an exchange-traded fund (ETF) generally offers:
- A segregated fund's 'automatic death benefit reset' feature:
Practice the whole Segregated Funds & Annuities module
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