Special Distributions and Tax Impact for Non-Registered Members
Plan sponsors may wish to consider whether this investment news has any implications for the investment options available within their plans. Sun Life Assurance Company of Canada purchases units of the funds listed below, which is established as a segregated fund in accordance with the Insurance Companies Act (Canada).
We’re letting you know of potential tax impacts for one or more of the following funds, within your Non-Registered (taxable) plan.
Segregated Fund |
Underlying Fund |
Distribution date(s) |
Investment Manager |
|---|---|---|---|
MFS Global Equity |
MFS Global Equity pooled fund |
June 11, 2024 |
MFS Investment Management Canada Limited |
TDAM Low Volatility Canadian Equity |
TD Emerald Low Volatility Canadian Equity Pooled Fund Trust |
August 10, 2024 |
TD Asset Management Inc. |
Beutel Goodman Fundamental Canadian Equity |
Beutel Goodman Fundamental Canadian Equity Pooled Fund |
September 17, 2024 |
Beutel, Goodman & Company |
Beutel Goodman Canadian Equity |
Beutel Goodman Canadian Equity Pooled Fund |
October 23, 2024 & November 1, 2024 |
Beutel, Goodman & Company |
The Segregated Funds made special distributions in the summer/fall of 2024. These Segregated Funds invest in the relevant underlying funds (as outlined in the table above).
Investment managers may distribute special payments to investors in the underlying funds (including Sun Life’s segregated funds) for various reasons. In this case, the investment managers made the distribution due to a significant sale by another investor. The sale led to the underlying funds realizing investment income, including capital gains. The investment managers distributed part of the investment income to the Segregated Funds. Sun Life allocated this investment income to all members who had money in the Segregated Fund(s), based on their unit holdings on the above listed distribution date(s).
When Sun Life allocated the investment income, the members’ Adjusted Cost Base (“ACB”) increased by the amount of the investment income allocated to their account. As such, they won’t see a transaction for the distribution in their account. You can think of the ACB as cost or ‘book value’ of the investment.
How will this affect plan members?
The special distribution may result in capital gains or other investment income (dividend or interest income) for all members who had money in the Segregated Fund within a Non-Registered plan as of the distribution date(s). In 2025, they may have to pay tax on this distribution for the 2024 tax year. We recommend that they speak with a tax professional for personalized guidance.
The special distribution doesn’t affect plan members if they started investing in the Segregated Fund after the distribution date(s) or had no unit holdings on those date(s).
If you also offer the Segregated Funds in Registered (non-taxable) plan(s), the special distribution won’t affect the members’ Registered plan(s) investments.
What to expect next?
Sun Life will provide the applicable tax slip(s) in February or March 2025. The tax slip(s) will also reflect all income from the members’ Non-Registered investments.
For more information on how capital gains can occur in segregated funds within Non-Registered plans, please read the article here. Plan members can find their ACB on mysunlife.ca and selecting Check on Account > Balances.
We’ll send an email the week of December 2, 2024, to Non-Registered members who held the Segregated Fund(s) as of month end following the distribution(s). A sample of the member email is available here.
Questions? We’re here to help.
Please contact your Sun Life Group Retirement Services representative. (In Quebec, registered as a Group annuity plan advisor).