UPDATE: Non-registered financial account enrolment process for FATCA

November 3, 2014

As previously communicated, Canada signed the Canada-United States Enhanced Tax Information Exchange Agreement (the Agreement) relating to the U.S. Foreign Account Tax Compliance Act (FATCA) on February 5, 2014.

The Bill to implement the Agreement into Canadian federal tax law received Royal Assent on June 19th, 2014, and the Agreement was implemented domestically by Canadian federal legislation as of July 1, 2014.

Since our last communication, the Department of Finance and Canada Revenue Agency (CRA) has published additional information which we’ve highlighted below:

1. What financial accounts and products are affected by the legislation?

There is no change to:

  • The registered products exempt status. This means Registered Pension Plans, Registered Retirement Savings Plans, Deferred Profit Sharing Plans, Registered Retirement Income Funds, Pooled Registered Pension Plans and Tax Free Savings Accounts are not subject to the FATCA requirements.
  • The Group Retirement Services (GRS) accounts and products that may require reporting; they are as follows:
    • Individual (i.e. plan member) accounts in non-registered products (with segregated funds, Guaranteed Interest Accounts, Guaranteed Investment Certificates and mutual funds), and non-registered payout annuities.
    • Entity 1 (i.e. sponsor or corporate member) accounts in non-registered products.


  • The Guidance provided by the CRA excludes, as custodial accounts for FATCA purposes, shares of a stock held in an employee stock purchase plan:
    • Employee stock purchase plans include employer stock offered in a non-registered savings plan or an Employees Profit Sharing Plan (EPSP). The relief for stock purchase plans means that these member accounts are not considered financial accounts for FATCA purposes. As such, FATCA requirements do not apply.
  • The CRA Guidance provides relief on annuity contracts. Provided the member was enrolled in a group annuity policy prior to July 1st, 2014, the member’s accounts are excluded from FATCA requirements and are not subject to the review, identify or report requirements.

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

2. NEW!  What is required of plan members as of July 1, 2014?

Plan members enrolled within non-registered products on or after July 1, 2014 are only required to provide information as part of the enrolment process to determine if they are U.S. residents for tax purposes (including U.S Citizens) if one or more of the following conditions are met:

  • The member information collected includes a U.S. address, U.S. telephone number, or any other relevant reference to the U.S. (all of which are considered U.S. indicia, under the Agreement),
  • A contribution is made to the plan other than by payroll deduction; or
  • A member enrolls in a plan with less than 25 members (defined as a 'Small Plan') the prior calendar year.

Plan members who meet the above criteria will receive a request from Sun Life asking them to confirm their status. This request will come in the form of a letter and accompanying form mailed directly to the member.

A few important points about the self-certification letters:

  • A member that does not respond to a request will automatically be considered reportable, after 90 days from the date on the letter.
  • Where the request to complete a self-certification form is triggered by the presence of U.S. indicia, the member will be required to provide proof of their status if they do not consider themselves a U.S. person.   
  • Where the request is only triggered by an enrolment within a 'Small Plan' or due to a non-payroll contribution, proof of status is not required. The member can simply return the completed self- certification form to Sun Life.
  • Members that have already provided a validated self-certification form, with proof, will not be required to complete additional declarations of status for additional contributions, or when making non-payroll contributions in the future. Members who provide a validated self-certification that they are not U.S. residents and that did not require proof (as noted in the point above) will be asked to self-certify again, upon the introduction of U.S. indicia, in the future.

3. NEW! What is required of plan members enrolled in products that are not exempt (in-scope) prior to July 1st, 2014?

Plan members enrolled in non-registered products with GICs or mutual funds prior to July 1, 2014 are subject to an electronic review on their accounts if their account balance exceeds $50,000 on June 30th, 2014. If U.S. indicia are found, the members are subject to the same self-certification process as above. These reviews will be completed by Sun Life no later than May 1st, 2016.

If we do not find any U.S. indicia, the members will not be asked to provide a self-certification until the members have a change of circumstance or make a contribution other than from payroll deduction.

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

Sun Life currently has no plans to ask sponsors to make changes to their current administrative processes.

However, plan sponsors are encouraged to ensure that member demographic information is accurate at all times. This includes information provided by members directly to Sun Life; as well as, information provided via demographic files.

Please note: a simple error in the capture of a member’s address and/or telephone number could now be enough to trigger an unnecessary self- certification request, under the new review processes.

For more information about the Canadian tax legislation and its requirements: please go to the Canada Revenue Agency website: http://www.cra-arc.gc.ca "Information for individuals with accounts with Canadian financial institutions."

We will continue to follow development related to this legislation and provide updates as required.

Please contact your Sun Life Group Retirement Services representative.