Non-residents - Non-registered annuity

Who is a non-resident?

A "non-resident" is a policyholder who resides outside Canada and is not required to file a Canadian income tax return. If a policyholder lives outside of Canada, Sunlife Financial is required to apply the non-resident tax rules to his/her policies. If Sunlife Financial receives a "Letter of Determination" advising us the policyholder is a Canadian for tax purposes, Sunlife Financial will apply the Canadian tax rules.

Completing the application and change of address

When annuity policies are being issued, the mailing address is used to determine where the policyholder pays tax. Therefore, if a policyholder is required to pay tax in a different province or country than the mailing address indicates, please indicate in Special Instructions which province or country he/she is required to pay tax. For example:

• If a policyholder is overseas with the armed forces, under Canadian law, he/she is deemed to be a resident in Canada for tax purposes. Please note in Special Instructions "Policyholder is in Canadian Armed Forces". This also applies to Canadian diplomats in other countries.
• If a policyholder lives in the USA and uses a Canadian mailing address, a notation "Policyholder files a USA tax return".

Temporary address change

If a policyholder is temporarily changing his/her mailing address to a country outside of Canada, but is still required to file a tax return in Canada, be sure to indicate the new address is "temporary". Where the taxpayer pays tax will not be changed on our records for temporary address changes. This also applies to non-residents who temporarily change their address to Canada, but file a tax return outside Canada.

Accrued income

Sunlife Financial is not required to report accrued income to non-residents. If a non-resident policyholder is returning to Canada, he/she may wish to pursue all options from a tax perspective before moving. Here are some considerations:

• Sunlife Financial will be required to report all unreported accrued income at the next accrued income reporting year. If the policyholder purchases a prescribed annuity, the unreported gain will be spread over the income period.
• For Pre-1990 annuities for which annual reporting has been elected, or a payment has been made after December 31, 1989, the reporting year will be the year the policyholder returns to Canada. Any unreported Pre-82 gain will be excluded.
• If triennial reporting applies, it is the next reporting year. For example, if the annuity was purchased in 1984, the reporting cycle is 1987, 1990, 1993, 1996, etc.
• Every year is a reporting year for post-1989 annuities.
• The policyholder may also wish to compare the tax payable as a non-resident and as a Canadian resident if he/she is planning to surrender the annuity.