New non-registered financial account enrolment process starts July 1, 2014

June 16, 2014

On February 5, 2014, Canada signed the Canada-United States Enhanced Tax Information Exchange Agreement (the Agreement) relating to the U.S. Foreign Account Tax Compliance Act (FATCA). The Agreement will be implemented domestically by Canadian federal legislation starting July 1, 2014.

Under the Agreement, Canadian financial institutions will be required to identify and document account holders of financial accounts covered by the Agreement and report certain information about financial accounts held by a U.S. Person to the Canada Revenue Agency (CRA). The CRA will be required to provide this information to the Internal Revenue Service (IRS).

Sun Life is prepared and has processes in place to ensure compliance with the new legislation. The following Q&A provides you with more details:

1. What financial accounts and products are affected by the legislation?
The Group Retirement Services (GRS) accounts and products that will require reporting are:

  • Individual (i.e. plan member) accounts in non-registered products (with segregated funds,  Guaranteed Interest Accounts, Guaranteed Investment Certificates, employer stock and mutual funds), and non-registered payout annuities.
  • Entity1 (i.e. sponsor or corporate member accounts) in non-registered products.

The legislation does not apply to

  • Registered products (including accounts in Registered Pension Plans, Registered Retirement Savings Plans, Deferred Profit Sharing Plans, Registered Retirement Income Funds, Pooled Registered Pension Plans and Tax Free Savings Accounts).  

2. What will be required of plan members starting July 1, 2014?
Plan members enrolled in non-registered products on or after July 1, 2014 may be required to provide additional information as part of the enrolment process to determine if they are U.S. residents for tax purposes (including U.S. Citizens).

If so, Sun Life will contact these plan members with a self-certification letter requesting that they certify their U.S or non-U.S. tax status within 90 days for possible future reporting to the CRA. Important note: If a response is not received within 90 days of the date of the letter, Sun Life must assume that the plan member is a U.S. Person under the Agreement and report the relevant information to the CRA.

Plan members enrolled in non-registered products before July 1, 2014 may also be required to certify their U.S. tax status.

3. What will be required of plan sponsors starting July 1, 2014?
Plan sponsors are not required to make system changes or provide additional plan member information for July 1, 2014. Existing demographic files, contribution files, and enrolment procedures initiated by the sponsor will remain unchanged. Important note: As the Canadian tax rules that deal with FATCA continue to evolve, it may become necessary for sponsors to accommodate changes to demographic or contribution files in the future.

4. What will be required starting July 1, 2014?

  • For non-registered trusteed plans that hold a sponsor’s U.S. stock, Sun Life Financial Trust, the trustee, will be required to complete an entity self-certification (in the form of an IRS W8BEN-E form) for the U.S. dividend payer.

For more information about the Canadian tax legislation and its requirements: please go to the Canada Revenue Agency website: "Information for individuals with accounts with Canadian financial institutions."

We will continue to follow developments related to this legislation and provides updates as required.

Please contact your Sun Life Group Retirement Services representative.

1 Corporations, trusts, partnerships or other entities that hold an in-scope account.