LLQP Segregated Funds & Annuities · Component 1.2 · 35% of the exam
The 'attribution rules' matter to assessing a client's existing non-registered investments because:
- Income on property gifted between spouses is taxed back to the giver, with limited exceptions
- BThey apply only to RRSPs, so non-registered investments can be freely transferred between spouses
- CThey eliminate all tax on transferred property, since the recipient is not taxed on gifts
- DThey do not affect existing investments, since attribution applies only to future purchases
Correct answer: A) Income on property gifted between spouses is taxed back to the giver, with limited exceptions
Attribution limits simple income splitting. Knowing where assets came from is part of assessing tax exposure.
Why the other options are wrong
- BThey apply to non-registered property, not registered plans.
- CThey reassign the tax to the giver; they do not eliminate it.
- DAttribution affects who pays tax on any gifted property.
Exam tip
Attribution: gifts between spouses/to minors tax back to giver; TFSA and prescribed-rate loans are exceptions.
Common mistake
Advising a client to 'put the investment in the spouse's name' to save tax.
What this tests
CISRO competency component 1.2 — 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.