knowledge topics

TFSA Contributions

KNOWLEDGE EXPECTED OF: Both CFP^® Professionals and QAFP^TM Professionals

Define limits related to Tax-Free Savings Accounts.
- Tax-Free Savings Account dollar limit¹
- Unused Tax-Free Savings Account contribution room²
Identify factors that impact Tax-Free Savings Account contribution room.¹
Identify the annual Tax-Free Savings Account dollar limit.¹
- For past years
- For current year
Identify the deadline by which contributions can be made to a Tax-Free Savings Account.
Identify the sources where Tax-Free Savings Account contribution limits may be obtained.¹
Identify unused Tax-Free Savings Account contribution room.
Explain how contributions made to a Tax-Free Savings Account affect unused Tax-Free Savings Account contribution room.
Explain how each of the factors may impact the suitability of contributing to a Tax-Free Savings Account, such as:
- Liquidity required
- Propensity to draw on savings
- Impact of future withdrawals on government benefits
- Impact on cash flow
- Potential for matching contributions by employer
- Opportunity cost of contribution
Evaluate how each of the factors may impact the suitability of contributing to a Tax-Free Savings Account.
Explain the tax impact of contributions made to a Tax-Free Savings Account.
- Cash
- Deposit in-kind³
- Transfer from Registered Retirement Savings Plan³
Estimate the tax impact of contributing to a Tax-Free Savings Account.
Define excess Tax-Free Savings Account amount (over-contributions).⁴
Calculate an excess Tax-Free Savings Account amount (over-contributions).
Explain the penalty tax imposed by the Canada Revenue Agency on excess Tax-Free Savings Account amounts (over-contributions).⁵
Calculate the penalty tax that may be imposed by the Canada Revenue Agency based on a Tax-Free Savings Account excess amount (over-contribution).
Explain the options available when a cumulative excess amount (over-contribution) for a Tax-Free Savings Account exists.⁵
Explain how each of the factors may impact the suitability of withdrawing a cumulative excess amount (over-contribution) from a Tax-Free Savings Account, such as:
- Penalty cost of maintaining excess amount in the plan
- Expected rate of return on investments
- Expected time period for Tax-Free Savings Account contribution room to match the value of the excess amount
- Plans for excess amount withdrawn
Evaluate how each of the factors may impact the suitability of withdrawing a cumulative excess amount (over-contribution) from a Tax-Free Savings Account.
Define a Tax-Free Savings Account Return, as required by the Canada Revenue Agency.⁶
Identify the deadline by which a Tax-Free Savings Account Return is due.⁶
Identify the deadline by which taxes owing due to over-contributions or contributions made while a non-resident are due.⁷

Glossary of Verbs (mouse over to see definition)

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
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 judgement through careful study
Interpret

To give the meaning of / to construe or understand / to translate orally

REFERENCES

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Financial Planning Body of Knowledge

knowledge topics

TFSA Contributions

KNOWLEDGE EXPECTED OF: Both CFP® Professionals and QAFPTM Professionals

Glossary of Verbs (mouse over to see definition)

REFERENCES

KNOWLEDGE EXPECTED OF: Both CFP^® Professionals and QAFP^TM Professionals