Income Splitting with Students

KNOWLEDGE EXPECTED OF: QAFP® Professionals

Highest Knowledge Level: Evaluation

Knowledge Levels and Associated Verbs


Awareness
The state of being aware that something exists / to have familiarity with a particular activity or subject
Understanding
To comprehend the general relationship of particulars / to have an expertise with how something works
Application
Ability to put information to use / to use knowledge for relevant, practical purposes
Evaluation
To judge or conclude by utilizing data / a systematic determination of something’s worth or significance
Define
To state exactly the meaning of
Identify
To be aware of / to recognize and correctly name / to locate an appropriate resource
Explain
To make clear the meaning of / to describe something in more detail or reveal relevant facts or ideas related to it
Determine
To ascertain / to come to a decision, such as by investigation or reasoning
Compare
To note the similarities and differences between two or more things
Estimate
To determine an approximate value for
Calculate
To find the value using mathematics
Convert
To change from one form or purpose to another
Evaluate
To reach a conclusion or make a through careful study
Interpret
To give the meaning of / to construe or understand / to translate orally

Hold cursor over or click on each term to read its definition.

  • Explain methods by which income-splitting may be accomplished with a student, such as:
    • Contributing to a Registered Education Savings Plan for which the student is a beneficiary 
  • Explain the estimated income tax impact for each income-splitting method.  
  • Determine how each of these factors may impact the suitability of splitting income with students:
    • Marginal tax rate differential between the taxpayer and student 
      • In current year 
      • In future years when withdrawals are made, if applicable
    • Impact on net taxes paid by the taxpayer and student
    • Income attribution rules
    • Potential impact on government benefits 
    • Potential impact on government-sponsored savings plans, including grants and bonds
    • Potential impact on ownership of assets
    • Potential impact on creditor protection of assets
    • Cost and fees associated with implementing the strategy to split income
  • Evaluate how each of the factors may impact the suitability of splitting income with students. 

KNOWLEDGE EXPECTED OF: CFP® Professionals

Highest Knowledge Level: Evaluation

Knowledge Levels and Associated Verbs


Awareness
The state of being aware that something exists / to have familiarity with a particular activity or subject
Understanding
To comprehend the general relationship of particulars / to have an expertise with how something works
Application
Ability to put information to use / to use knowledge for relevant, practical purposes
Evaluation
To judge or conclude by utilizing data / a systematic determination of something’s worth or significance
Define
To state exactly the meaning of
Identify
To be aware of / to recognize and correctly name / to locate an appropriate resource
Explain
To make clear the meaning of / to describe something in more detail or reveal relevant facts or ideas related to it
Determine
To ascertain / to come to a decision, such as by investigation or reasoning
Compare
To note the similarities and differences between two or more things
Estimate
To determine an approximate value for
Calculate
To find the value using mathematics
Convert
To change from one form or purpose to another
Evaluate
To reach a conclusion or make a through careful study
Interpret
To give the meaning of / to construe or understand / to translate orally

Hold cursor over or click on each term to read its definition.

  • Explain methods by which income-splitting may be accomplished with a student, such as:
    • Contributing to a Registered Education Savings Plan for which the student is a beneficiary 
  • Explain the estimated income tax impact for each income-splitting method.  
  • Determine how each of these factors may impact the suitability of splitting income with students:
    • Marginal tax rate differential between the taxpayer and student
      • In current year
      • In future years when withdrawals are made, if applicable
    • Impact on net taxes paid by the taxpayer and student
    • Income attribution rules
    • Potential impact on government benefits;
    • Potential impact on government-sponsored savings plans, including grants and bonds
    • Potential impact on ownership of assets
    • Potential impact on creditor protection of assets
    • Cost and fees associated with implementing the strategy to split income
  • Evaluate how each of the factors may impact the suitability of splitting income with students.
Additional Knowledge Expected of CFP Professionals
  • Determine how each of these factors may impact the suitability of splitting income with students:
    • Potential for CRA to deem method unreasonable and used only for tax avoidance under General Anti-Avoidance Rules (GAAR)
  • Estimate the income tax impact for each income-splitting method.
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