LLQP (Life Licence Qualification Program) Practice Exam · Question
In a non-registered segregated fund contract, how do annual income and capital gains allocations affect the contract's Adjusted Cost Base (ACB)?
The Adjusted Cost Base (ACB) of a segregated fund is increased by any allocations of capital gains or income made to the contract holder, even if they are reinv
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Question: In a non-registered segregated fund contract, how do annual income and capital gains allocations affect the contract's Adjusted Cost Base (ACB)?
Answer options:
- Allocations decrease the ACB.
- Allocations have no effect on the ACB. ✅ Allocations increase the ACB.
- Allocations only affect the ACB if they are withdrawn.
Correct answer: Allocations increase the ACB.
Explanation: The Adjusted Cost Base (ACB) of a segregated fund is increased by any allocations of capital gains or income made to the contract holder, even if they are reinvested, to avoid double taxation upon redemption.
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- A life insurance policy that offers lifelong coverage, a guaranteed death benefit, and a savings component tha
- Group benefits in Canada commonly include:
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