Canadian tax legislation requires Canadian financial institutions (including Sun Life) to identify members in non-registered plans who are United States (U.S.) persons or tax residents of a country other than Canada and the U.S.
What is the current process?
Today, when we identify such members, we’re required to send them a Tax Jurisdiction Confirmation form (Self Certification form). The member needs to complete it, sign it and return the form to Sun Life.
Depending on the situation (ex. if they have a foreign address or phone number on their records), we may require proof that they’re not a foreign tax resident for tax purposes.
If the member doesn’t provide the required proof by a given date, Sun Life will assume that the member is a non-Canadian tax resident for tax purposes. In this case, we may be required to report member information to the Canada Revenue Agency (CRA).
How is Sun Life process changing starting in November 2023?
Foreign Account Tax Compliance Act (FATCA) and Common Reporting Standards (CRS) have recently made changes to the process outlined above. Canadian financial institutions (including Sun Life) are now required to impose restrictions on accounts of members who don’t reply.
Starting November 2023, if Sun Life doesn’t get a response from the member by the given date, Sun Life will consider the member’s non-registered product(s) as noncompliant with the FATCA/CRS requirements. As a result, we’ll restrict specific financial transactions in their account in accordance with FATCA and CRS guidance.
What transactions will be restricted?
- Lump-sum deposits
- Recurring lump-sum deposits
- Inter-product Transfers
- Inter-Client Plan Member (CPM) transfers
- Annuity payments
Regular payroll contributions will NOT be impacted.
What products are impacted?
This change impacts only non-registered products (ATSV, DCMP, EPSP, NREG, SABP, SAV and Annuities funded from non-registered products).
How will we notify members?
Before the change, Sun Life would send the member only an initial letter with the Tax Jurisdiction Confirmation form (Self-certification form).
Starting Nov 2023, Sun Life will send a newly defined initial letter that explains new restrictions and the impact of non-response along with the Tax Jurisdiction Confirmation form (Self-certification form). If no response is received, at 90 days after the initial letter, transaction restrictions will be applied, and a transaction restriction confirmation letter will be sent.
For questions, please contact your Group Retirement Services representative.