CIFP RRC Exam cheat sheet

RRSP deduction limit for a year = 18% of prior-year earned income, capped at the annual money purchase limit, minus the pension adjustment (PA) and any past-service pension adjustment (PSPA), plus unused RRSP room carried forward.

Earned income for RRSP purposes includes employment, self-employment and net rental income, but excludes pension income, retiring allowances, RRSP/RRIF withdrawals, and investment income such as interest, dividends and capital gains.

RRSP contributions must be made by the RRSP contribution deadline (60 days after year-end) to be deductible for that tax year; unused deductions may be carried forward indefinitely.

At age 71 the RRSP must be matured: options are a RRIF, an annuity, or a lump-sum withdrawal; a spousal RRSP (contributor's age governs) allows income splitting at maturity.

RRIF minimum annual withdrawal = prior December 31 balance divided by the prescribed factor for the annuitant's age; the factor is 1/(90 - age) for ages under 71 and fixed percentages thereafter.

CPP retirement pension is available as early as age 60 with a permanent reduction of 0.6% per month before 65, and increased by 0.7% per month for deferral after 65 up to age 70.

OAS pension may be deferred up to age 70 with a 0.6% per month increase; the OAS clawback (recovery tax) applies when net income exceeds the annual threshold, at 15% of excess income.

TFSA contribution room is $7,000 per year (2024-2025, indexed), accumulates from age 18, and is restored the following year after a withdrawal; contributions are not deductible and withdrawals are tax-free.

Defined benefit pension adjustment = 9 × benefit entitlement − $600; combined with RRSP room this ensures tax-assisted retirement savings are roughly comparable across plan types.

Net worth = total assets − total liabilities; the statement of cash flow compares inflows and outflows over a period, while net worth is a point-in-time measure.

Emergency fund guideline: three to six months of essential living expenses held in liquid, low-risk accounts such as high-interest savings or money market funds.

Future value of a lump sum = PV × (1 + r)^n; present value = FV ÷ (1 + r)^n; for annuities use the ordinary annuity or annuity due formulas depending on timing of payments.

Rule of 72: approximate doubling time in years ≈ 72 ÷ annual rate of return (in percent); more precisely, n = ln(2) ÷ ln(1 + r).

Real rate of return ≈ nominal rate − inflation rate (Fisher approximation); exact real rate = (1 + nominal) ÷ (1 + inflation) − 1.

Human capital (present value of future earnings) plus financial capital equals total economic wealth; life insurance needs analysis often uses the income replacement or needs approach.

Savings rate required to reach a goal: solve FV of annuity for PMT given n, r, and target amount; increasing n or r lowers the required annual contribution.

Investment policy statement elements: objectives (return and risk), constraints (liquidity, time horizon, tax, legal, unique), and asset allocation consistent with risk tolerance.

Standard deviation measures total volatility; beta measures systematic risk relative to the market; Sharpe ratio = (portfolio return − risk-free rate) ÷ portfolio standard deviation.

Canadian personal income tax uses progressive marginal brackets; marginal tax rate applies to the next dollar of income, while average tax rate = total tax ÷ total income.

Capital gains inclusion rate: 50% of a capital gain is taxable (included in income) for individuals; capital losses may only offset capital gains, with allowable capital losses carried back 3 years or forward indefinitely.

The principal residence exemption allows tax-free disposition of a principal residence; the formula reduces the gain by (1 + years designated) ÷ years owned.

Dividend tax credit: eligible dividends receive a 38% gross-up and a federal DTC of 15.0198%; non-eligible dividends receive a 15% gross-up and a 9.0301% federal DTC.

RRSP contributions are deductible, growth is tax-deferred, and withdrawals are fully taxable; TFSA contributions are non-deductible but growth and withdrawals are tax-free.

Registered pension and RRIF income may be eligible for the pension income tax credit (up to $2,000) and pension income splitting with a spouse at any age for certain qualifying pension income.

Marginal tax rate on a bonus or RRSP withdrawal should be compared with the expected future withdrawal rate; deferring tax is beneficial when the future marginal rate is lower.

Capital cost allowance (CCA) provides depreciation deductions on business assets; recapture occurs when proceeds exceed undepreciated capital cost, and terminal loss occurs when a class is emptied below UCC.

Life insurance death benefit is generally paid tax-free to a named beneficiary; if paid to the estate, it becomes subject to probate and creditors.

Permanent policies build cash value with tax-deferred growth inside the policy; policy loans and withdrawals may reduce the death benefit and create taxable dispositions.

Term insurance provides pure protection for a specified period with no cash value; convertible term allows conversion to permanent coverage without new evidence of insurability.

At death, registered plans (RRSP/RRIF) are deemed disposed and fully taxable unless rolled to a spouse or common-law partner; the terminal return includes these amounts.

A spousal rollover defers tax on RRSP/RRIF and capital property transferred to a spouse; a joint spousal or common-law partner trust can be used for minor children.

Probate fees (estate administration tax) are based on estate value; assets passing by beneficiary designation (life insurance, RRSP with named beneficiary) generally bypass probate.

A will directs distribution of probate assets; intestacy rules apply without a will, and a trust can manage assets for minors or dependants.

Estate freeze: transferring growth assets to a family trust or corporation freezes the estate value at the date of transfer, shifting future growth to beneficiaries.

Insurance needs analysis: capital retention (preserve capital, pay income from it) versus capital liquidation (use up capital to meet needs); the needs approach sums debts, income replacement, education, and final expenses minus existing resources.