Pearson LLQP New Attempt

To calculate net worth, we sum the couple’s assets and subtract their liabilities. The calculation is as follows:

Assets:

Leonard’s chequing account: $3,000

Ashley’s chequing account: $3,000

Leonard’s group RRSP: $40,000

Ashley’s car (Subaru WRX): $20,000

Total Assets:$66,000

Liabilities:

Ashley’s car loan: $10,000

Leonard’s student loan: $30,000

Total Liabilities:$40,000

Net Worth Calculation:

$66,000 (Assets) - $40,000 (Liabilities) = $26,000

The couple’s net worth is therefore $26,000, which aligns with LLQP methodologies for net worth calculations by considering all assets minus liabilities​.

Sasha’s plan allows him to choose his own investments, and the company is required to contribute, while his own contributions are optional. This structure is indicative of a DefinedContribution Pension Plan (DCPP). In a DCPP, the employer contributes a fixed amount to the employee’s retirement plan, and employees often have control over how their funds are invested. Employee contributions are typically voluntary, as outlined by LLQP guidelines on pension plans​.

Options B, C, and D do not match because Defined Benefit Plans do not provide investment choice, DPSPs usually have discretionary employer contributions, and group RRSPs are not pension plans and typically involve mandatory employee contributions.

In a non-registered equity segregated fund, capital gains are only 50% taxable under Canadian tax rules. Amber’s investment grew by $15,000, which represents a capital gain. As per LLQP guidelines, capital gains on non-registered investments are subject to preferential tax treatment,meaning only half of the gain is added to taxable income. Therefore, only $7,500 of the gain will be taxable. This treatment is consistent with capital gains taxation principles outlined in the LLQP material, where only the taxable portion of the capital gain is reported, resulting in reduced tax liability compared to regular income​​.

Group segregated funds typically have lower Management Expense Ratios (MERs) than individual segregated funds because group plans benefit from economies of scale and pooled investment options. LLQP highlights that group plans often have reduced fees compared to individual plans due to collective investment and reduced administrative costs​.

Options A and B are incorrect as group plans typically feature lower costs and don’t often charge switching fees. Option C is incorrect as individual segregated funds typically have more flexible death benefit guarantee options, not special rates in group plans.