A consolidation loan is the most appropriate initial strategy. Peter and Anna have multiple debts, including maxed-out credit cards and vehicle obligations, but they also have stable employment, indicating an ongoing capacity to service debt. Their central problem is therefore the number and structure of their obligations rather than an established inability to generate repayment income.

Debt consolidation combines several outstanding debts into one loan, generally producing a single scheduled payment and potentially replacing high-interest credit-card balances with lower-cost borrowing. The Financial Consumer Agency of Canada specifically identifies consolidation loans as a method of combining multiple debts and simplifying repayment.

A revolving line of credit may also consolidate debt, but it remains reusable and can create further indebtedness if borrowing behaviour is not controlled. Because the couple does not own a home, home-equity financing is unavailable. Bankruptcy is an insolvency remedy and should not normally be the first recommendation where clients have stable employment and may be capable of restructuring their obligations. “Automatic discharge” relates to the bankruptcy process rather than being a standalone debt-management strategy available before bankruptcy.

FPII reference/topic: Savings Planning and Debt Management — debt restructuring; consolidation loans; consumer credit management; insolvency alternatives.

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A significant estate-planning disadvantage of private corporate ownership is the potential for double taxation at the death of a shareholder.

At death, a shareholder is generally deemed to dispose of capital property, including shares of a private corporation, at fair market value immediately before death unless an available rollover applies. This can produce a capital gain on the deceased shareholder's terminal return.

A second layer of tax can subsequently arise when corporate assets are sold and the corporation's after-tax value is distributed to the estate or beneficiaries. Without appropriate post-mortem planning, tax may therefore arise once at the shareholder level on the deemed disposition of the shares and again at the corporate/shareholder level as corporate value is extracted.

Option B is incorrect because one of the principal advantages of incorporation is limited liability, subject to guarantees, statutory liabilities, and exceptional circumstances. Option C is also incorrect because corporations are not categorically excluded from government assistance programs. Option D does not describe the principal disadvantage being tested and overstates the operation of attribution rules.

Post-mortem strategies such as loss carryback or pipeline planning may be considered to mitigate the potential double-tax exposure, depending on circumstances.

FPII reference/topic: Financial Planning for Small Business — incorporation; shareholder death; deemed disposition; post-mortem taxation and double-tax exposure.

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The applicable exam principle is the presumptive three-year limitation or “three-year rule” for retroactive child-support adjustments. Counting back three years from November 2018 produces November 2015, making option B correct.

The Supreme Court of Canada's framework in D.B.S. v. S.R.G. established that effective notice is highly important in deciding the commencement date for retroactive child support and that, as a general rule, an award should not extend more than three years into the past. The Court described effective notice broadly: formal court proceedings are not required; the support issue merely needs to have been raised with the other parent.

Later Supreme Court authority continues to recognize the three-year presumptive rule, while emphasizing that it is not absolute. Factors such as blameworthy conduct, failure to disclose income, the child's circumstances, delay, and hardship can justify a different result.

For FPII examination purposes, with November 2018 as the relevant notice date and no additional facts establishing exceptional conduct, the three-year look-back identifies November 2015.

FPII reference/topic: Family Law — child support; retroactive support; effective notice; three-year presumptive rule.

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A Supplemental Executive Retirement Plan is generally an unregistered deferred compensation arrangement designed to provide highly compensated employees with retirement benefits beyond limits available through registered retirement arrangements.

Where the SERP is structured as an unfunded or notional arrangement, the employer normally records the promised benefit as an obligation rather than receiving an immediate deduction for a funded registered-plan contribution. The employer's deduction generally arises when the benefit is ultimately paid and becomes taxable compensation to the executive. Canadian SERP structures commonly use this deferred-deduction treatment.

This is an important distinction from a registered pension plan. A SERP is not simply registered with CRA so that unrestricted deductible contributions may be made. Its principal purpose is precisely to supplement benefits limited by the tax rules governing registered retirement arrangements.

A funded SERP can also involve a Retirement Compensation Arrangement, which brings a separate tax regime, including refundable tax on contributions to the RCA custodian. Therefore, the precise tax consequences depend on funding structure.

For the examination scenario, option C describes the core tax consideration associated with a conventional unfunded SERP: the employer's tax deduction is deferred until the retirement benefit is paid.

FPII reference/topic: Retirement Planning — SERPs; executive compensation; deferred compensation; registered versus non-registered retirement arrangements.

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The applicable maximum is 50% of the payor's net amount under the ordinary support-deduction framework.

Ontario's Family Responsibility and Support Arrears Enforcement Act provides that the total amount deducted by an income source and remitted under a support deduction order generally must not exceed 50% of the net amount owed by the income source to the payor.

The “net amount” concept is important because the statutory limit does not simply mean 50% of gross salary. Required statutory deductions are taken into account in determining the amount available for enforcement.

The support obligation itself continues to exist even where enforcement through a particular income source is limited. Arrears can accumulate and other enforcement measures may become available. There are also specific statutory exceptions applying to certain lump-sum amounts and enforcement circumstances, so the 50% figure should be understood as the standard deduction limit tested by the question rather than an absolute limit in every possible enforcement proceeding.

Accordingly, among the four alternatives, 50% correctly represents the general maximum deduction against the payor's net income source for support enforcement.

FPII reference/topic: Family Law — child-support enforcement; support deduction orders; garnishment; limits on deductions from income.

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The strongest indicator in this scenario is that Joshua and Marie share the net profits, making option B the appropriate answer.

A partnership does not require a formal written partnership agreement. Canadian partnership analysis focuses on whether the parties are carrying on a business in common with a view to profit. CRA guidance, drawing on Supreme Court of Canada partnership jurisprudence, confirms that documentary evidence is relevant but the surrounding facts and actual conduct of the parties can establish the relationship.

Mere co-ownership of an asset does not automatically create a partnership. Two individuals can jointly own real estate without conducting business as partners. The important distinction is whether their activities demonstrate a common profit-making business. CRA guidance specifically distinguishes simple co-ownership from partnership and notes that sharing profits is a material partnership factor, whereas simply receiving each co-owner's portion of gross returns does not necessarily create one.

Their family relationship and non-arm's-length status also do not prevent a partnership from existing.

Accordingly, the combination of joint operation and equal sharing of net profits supports the partnership characterization.

FPII reference/topic: Financial Planning for Small Business — partnerships; creation of partnerships; co-ownership versus partnership; profit sharing.

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The employer's conduct is best characterized as undue influence. The employer occupies a position of power relative to the employee and is using that relationship to influence the employee's independent decision about entering into a contract with a particular contractor.

Undue influence focuses on whether one party's free and informed consent has been improperly affected through a relationship involving dominance, dependency, confidence, or significant influence. The Supreme Court of Canada has described the analysis as beginning with the nature of the relationship and whether it creates the potential for one person to dominate another's decision-making. The Court has also expressly recognized that an employer may occupy a position of power and influence relative to an employee depending on the circumstances.

The promise or suggestion of a larger future bonus creates pressure through the employment relationship but does not amount to classic duress, which ordinarily involves coercive threats or illegitimate pressure depriving a person of meaningful choice.

There is also no false factual representation concerning the contractor, so misrepresentation does not apply. Nor does recommending a contractor make the object of the roofing contract illegal.

FPII reference/topic: Financial Planning Practice — contract validity; undue influence; duress; misrepresentation; relationships of power and dependency.

The Guaranteed Income Supplement is income-tested rather than asset-tested. Consequently, the relevant item is dividend income.

For GIS purposes, taxable investment income—including taxable Canadian dividends—forms part of the income used to determine entitlement. As income rises, GIS benefits may be reduced or eliminated depending on the recipient's marital status and applicable income threshold. Service Canada specifically includes interest, investment income, capital gains, and taxable Canadian dividends among the income sources relevant to income-tested OAS benefits.

By contrast, merely owning a cottage or holding investment assets does not directly reduce GIS because there is no general GIS asset test. Those assets become relevant when they generate reportable income—for example, rental income, interest, dividends, or realized taxable capital gains.

Old Age Security itself is specifically excluded when determining income for GIS purposes. Therefore, receiving the basic OAS pension is not treated in the same way as taxable investment income when calculating GIS entitlement.

This distinction is important in retirement planning because two clients with identical net worth can have very different GIS outcomes depending on the type, timing, and tax characterization of their retirement income.

FPII reference/topic: Retirement Planning — Old Age Security; Guaranteed Income Supplement; income testing; retirement-income taxation.

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