Trust GICs advisor resources

* Principal protection provided up to CDIC deposit coverage limits.

** Interest rates vary depending on the length of the investment term selected and the rates available in the market at the time of purchase.

• Superflex/Income Master, Sun GIC Max, and GIC - Comparison

There are 3 interest types available.

Each investment within a contract must have the same interest type. If a client wishes to reinvest a maturing investment to an investment with a different interest type (i.e. compound interest to annual interest), a new GIC will be required with a new application completed. Instructions will also be required to transfer the money from the existing GIC to the new GIC.

Regardless of the interest type selected, each product offers:

• a daily interest investment.
• guaranteed interest investments (minimum investment $1,000).

Interest types

1.  Compound interest

• After interest is added to the investment each day, the combined sum continues to earn the same rate as the original principal for the duration of the guaranteed investment.
• Interest is quoted on an effective annual basis.
• Interest rates are expressed as a rate per year compounded annually.

2.  Monthly interest - not available for RRIF

• Interest is calculated and added to the value of each guaranteed interest investment daily.
• The amount of interest earned each month will equal 1/12th the annual interest. The annual interest equals the principal multiplied by the applicable interest rate.
• Interest from a guaranteed investment rolls to the daily interest investment automatically on each monthly anniversary date of the individual investment.
• If the client chooses to withdraw the interest on a monthly basis, electronic funds transfer (EFT) will be used to transfer the amount to the client's bank account.

3.  Annual interest - not available for RRIF

• Interest is calculated and added to the value of each guaranteed interest investment daily.
• Interest is quoted on an effective annual basis.
• Interest from a guaranteed investment rolls to the daily interest investment automatically on each annual anniversary date of the individual investment.
• If the client chooses to withdraw the interest on an annual basis, there are 2 payment options; cheque or EFT.

When guaranteed interest investments end

• For terms greater than a year, interest and principal from a guaranteed investment roll to the daily interest investment automatically. Investment instructions are required if a subsequent investment or withdrawal is required.
• For term less than one year, interest and principal will automatically roll to the same term unless alternate instructions are provided

This document provides information about contributions to Registered Retirement Savings Plans (RRSPs).

The RRSP dollar limit

A taxpayer's RRSP dollar limit is identified on the Notice of assessment or Notice of reassessment produced by the Canada Revenue Agency (CRA). This is referred to as the RRSP contribution room. You can view RRSP limits on the CRA website.

The unused RRSP contribution room

The unused RRSP contribution room measures the amount of RRSP contribution that can be carried forward for future years. It is used for three purposes:

1. The unused RRSP contribution room determines the amount of RRSP contribution that may be made and deducted in a year allowing a taxpayer to defer the contribution made to their RRSPs. This is the carry forward function.
2. The unused RRSP contribution room limits the improvements that may be made to the past service benefits of a taxpayer under a Registered Pension Plan (RPP). The RRSP contribution room allows a person to integrate benefits provided under RPPs with contributions to RRSPs. The taxpayer must ensure that their total tax-assisted saving does not exceed the overall allowable limits.
3. The unused RRSP contribution room is used to determine if a taxpayer has over-contributed to their RRSPs.

To determine the amount of the unused RRSP contribution room, Pension Adjustment (PA) and Past Service Pension Adjustment (PSPA) have to be taken into consideration.

The formula to calculate the unused RRSP contribution room is calculated at the end of a year as:

1. the unused RRSP contribution room at the end of the preceding tax year plus
2. the lesser of the RRSP dollar limits for the year and 18% of earned income for the previous year minus
3. all PAs for the previous year, the net PSPA and RRSP contributions deducted in the year.

While a taxpayer's unused RRSP contribution room will normally be positive or zero, it can also be negative meaning they may have over-contributed.

• A negative amount may also result where an improvement to the taxpayer's past service benefits under an RPP results in a PSPA that is greater than the available contribution room.
• A taxpayer is permitted to over-contribute to their RRSP for a lifetime amount of $2,000.00 (but this limit is increased to $8,000.00 if the over contribution was prior to February 27, 1995).

Example 1: No carry-forward of unused RRSP contribution room

Let's track an example through 2019 and 2020 and assume a taxpayer has earned income of $150,000. The 2019 RRSP dollar limit was $26,500 and the 2020 RRSP dollar limit was $27,230.

• He is not a member of an Registered Pension Plan (RPP) or Deferred Profit Sharing Plan (DPSP), therefore, no Pension Adjustment (PA) or Past Service Pension Adjustment (PSPA).
• He makes the maximum contribution each year.
• The unused deduction room at the end of 2019 is as follows:

Example 2: Carry-forward of unused RRSP contribution room

Let's track another example through 2019 and 2020.

• Assume a taxpayer has earned income of $150,000.
• He is not a member of an RPP or DPSP, so he has no PA or PSPA.
• He did not make contribution in 2019 therefore he can carry forward unused RRSP contribution room.
• The unused contribution room at the end of 2019 and 2018 is as follows:

Deductible contribution

The contributor to an RRSP may deduct the lesser of:

1. All contributions paid on or before the day that is 60 days after the end of the year; and
2. Their RRSP deduction limit for the year.

Client-selected end dates (CSED), available on all Sun Life guaranteed interest products available for sale, allow clients to select the end dates on their guaranteed interest investments. Having this option increases our competitiveness by spreading out both the workload and flow of funds to invest. This, in turn, helps you attract more Clients and retain the ones you have. It can also spread your workload throughout the year.

Client-selected end dates give clients flexibility and control over their money by allowing them to:

• plan future guaranteed interest investments to roll over at the same time as existing investments, so they can take advantage of large case rate enhancements.
• choose an end date that suits their needs (planning for an upcoming large purchase, a vacation etc.).
• choose any length of investment as follows:
  • between 30 days and 5 years
  • RRIF  - between 1 and 25 years

Interest rates will be interpolated. Interpolation is calculated to the nearest .01%.

The formula for interpolation is RATE = R1 + (#days/365) x (R2-R1) where:

• R1 = rate for the next lowest even year
• R2 = rate for the next highest even year
• #days = number of days into the non-even year

There are 2 types of investment options available to Clients:

• Daily interest investment
• Guaranteed interest investments

Daily interest investment

Interest

• The interest rate can fluctuate daily.
• Interest begins when we receive the application and the money.
• Interest is calculated and credited daily to the balance of the investment.

Note: Rate enhancement levels do not apply to daily interest.

Advantages

• Money can be deposited or withdrawn at any time.
• The money is accessible with no market value adjustment (MVA).
• Deposits can be made by:
  • cheque,
  • external transfer, or
  • any combination of these.
• Once $1,000 has accumulated in the daily interest investment, a client may choose to transfer the money into a guaranteed interest investment.

Minimum investments

• The minimum amount required to open a GIC product is $250.
• The minimum required to open a guaranteed interest product with RIF registration is $5000.

Note: The minimum opening investment should always be paid with application except in the case of an external transfer.

Guaranteed interest investments

• The interest rate is guaranteed for a specific term.
• The minimum amount required to establish a guaranteed interest investment is $1,000.
• Interest is calculated from the date the guaranteed interest investment is established.

Advantages

The client can have several guaranteed interest investments all within the same plan. With the exception of GICs with RIF registration, a client can have an unlimited amount of investments in one contract - in any or all of the terms available. GIC RRIFs are limited to 5 investments.

Note: GIC products only allow one interest type per plan (i.e. all compound or all annual interest).

The interest rate is guaranteed for any period between:

• 30 days and 5 years for GIC products
• 1 and 25 years for all products with RIF registration

This means the client can select:

• a certain term or (e.g. 19 months, 3 years, etc.)
• If a certain term is selected, the investment will mature at the end of the selected number of years/months.
• a specific end date (e.g. October 15, 2021, July 20, 2022, etc.)

On a GIC, money can be withdrawn before the end of a guaranteed interest investment, but may have a market value adjustment (MVA). Sun GIC Max guaranteed interest investments are not redeemable until the maturity of the term.

At the end of the GIC/Sun GIC Max guaranteed interest investment term, the client can:

• withdraw their money,
• reinvest their money in a new guaranteed interest investment at the then current interest rate for the selected term,
• leave their money in the daily interest investment.

If the client has their money in a short term investment (less than 1 year), the money automatically reinvests based on the posted rate available for that product for the same term, unless investment instructions are provided before the investment matures.

If the client has their money in a long term investment (1 year or more), we credit the money to the daily interest investment at maturity, unless investment instructions are provided before the investment matures.

Note: Prior to maturity, notices will be mailed to clients and maturity instructions can be provided up to 45 days before the investment matures.

Rate commitments

Subsequent cheque deposit – investment instructions

We "interpolate" interest rates for investment terms that lie between whole years. This interpolation will be calculated to the nearest .01%.

The formula for the interpolation is RATE = R1 + (#days/365) x (R2-R1) where:

• R1 = rate for the next lowest even year
• R2 = rate for the next highest even year
• #days = number of days into the non-even year

e.g. If the 2-year rate is 5% and 3-year rate is 6%, then the rate for 2 years and 8 days (time between start date and end date) is: 5% + (8/365) x (6% - 5%) = 5.021918% so that client would receive 5.02%.

Note: For short-term GIC products, #days/365 in the above formula becomes the #days beyond the lower term for which a rate is stated divided by the number of days between the lower and higher terms (e.g. for a 35-day rate, use (35-30)/(60-30)).

The method of determining the start date remains unchanged:

• with fund commitment - date of commitment
• without fund commitment - date funds and/or forms are received at head office

Sun GIC Max (Trust GIC, non-redeemable) / Guaranteed Investment Certificate (Trust GIC, redeemable)

• $1,000 for guaranteed investments
• $250 for daily interest investment
• No pre-authorized chequing (PAC)
• Short term investments are available (< 1 yr)

RRIF registration 

• Initial policy minimum $5,000
• Payment minimum - If the full amount of the legislated minimum has not been met, the balance will be paid out December 31 each year

Minimum age requirements to purchase Sun Life Trust GIC products (all registration types)

Jointly-owned Sun GIC Max or Guaranteed Investment Certificates (GICs)

Important points to remember:

• GIC products do not have an annuitant.
• Joint ownership is only permitted on non-registered contracts.
• Each applicant must sign the application.
• Names and dates of birth are required for each applicant.
• Cannot appoint a beneficiary on non-registered contracts. Beneficiary is the Estate.
• Laws that apply are the Trust and Loan Companies Act and the Civil Code of Quebec.
• A jointly-owned corporate account can be purchased.

Important points to consider

• Joint owners can be either Joint tenants with right of survivorship (JTWROS) or Joint tenants in common (JTIC). 

Note: JTWROS is not available in Quebec.

• For JTWROS owners, the account is automatically transferred to the surviving owner and any interest credited to the account prior to death is reported to the deceased and the surviving owner. Any interest credited after the date of death is taxed to the surviving owner.
• For JTIC, the account becomes the property of the Estate of the deceased and the surviving owner. Any interest credited prior to the death is taxed to the deceased and the surviving owner. Any interest credited after the date of death is taxed to the Estate of the deceased and the surviving owner. The executor of the estate would provide written direction as to who ownership of the deceased's share should pass to under the will. If the value of the deceased owner's products with us (including his or her share in this contract) is $100,000 or more, probate will be required.

Tax note

One of the taxable benefits of a jointly-owned policy, either an Insurance GIC or Trust GIC product, is that the tax burden can be shared by the owners. The tax slip is issued to both owners, and it is between the clients and CRA, who claims the interest. CRA states that if Mr. & Mrs. Smith each put in 50% of the principal, then each owner should claim 50%.

On guaranteed interest investments, early withdrawals are not permitted. Withdrawals can be made any time from the daily interest investment without a market value adjustment (MVA).

• For monthly or annual interest plans, interest can remain within the plan, be moved to another Sun Life plan or paid by electronic funds transfer (EFT).
• Full and partial withdrawals are permitted from the daily interest investment. If the contract is to be left in force, a minimum of $250 must be left in the contract.
• Withdrawals can be paid by cheque or EFT.
• Withdrawals from RRSP and RRIF are subject to withholding tax.
• RRIF income payments are not considered withdrawals; they are free of MVA and are taken proportionally from all investments.

On guaranteed interest investments, early withdrawals are subject to a market value adjustment (MVA).

• For monthly or annual interest plans, interest can remain within the plan, be moved to another Sun Life plan or be paid by electronic funds transfer (EFT).
• Full and partial withdrawals are permitted. For partial withdrawals from a guaranteed interest investment, the minimum withdrawal is $1000. If the remainder of the investment is to be left intact, there must be a minimum of $1000 left. If there will not be at least $1000 remaining after the withdrawal, the balance will be transferred into the daily interest investment.
• Withdrawals can be paid by cheque or EFT.
• If the policy is to be left in force, a minimum of $250 must be left in the contract.
• Cash values of guaranteed interest investments depend on the interest rate and expense factor at the time of the withdrawal and may be less than the accumulated value.

RRIF

• Each year the first unscheduled withdrawal of up to 5% of the January 1 value of the contract is not subject to MVA.
• A withdrawal would not be allowed if the effect on an investment is that the balance would be zero before the investment end date, based on the existing income schedule.
• Income payments are not considered withdrawals; they are free of MVA and are taken proportionally from all investments.
• Withdrawals from RRSP and RRIF are subject to withholding tax.

The following information is designed to clarify how Sun Life administers a successor owner on a TFSA policy. Even though some applications do not specifically ask for a successor owner to be named, a TFSA policy allows the spouse the option of becoming the successor owner upon death of the owner.

TFSA regulations stipulate that only the spouse of an owner can become the successor owner (the survivor) of the TFSA policy.

In order to ensure that the spouse has the option of becoming the owner they must be the only beneficiary named on the policy. At death they will have the option of taking the value in cash or becoming the full owner of the policy who can exercise all of the ownership rights including the right to designate a beneficiary.

This applies to the following individual guaranteed TFSA Trust GIC policies available at Sun Life:

• Sun GIC Max TFSA
• SLF Trust GIC TFSA

NOTE: beneficiary designations and successor holder rights do not apply in the province of Quebec for these products.

TFSA Quick Tips

• When transferring money from another institution watch out for transaction fees. Clients may want to check with the relinquishing institution to confirm whether or not a fee will apply.
• Make sure you complete a transfer and not a withdrawal. If a withdrawal is completed, the contribution room will only return in the following calendar year and any deposit in the current year will count as a new deposit. Be sure to use Transfer registered assets from another company to a registered product (E63) when completing a TFSA transfer from another institution.
• Clients are able to hold more than one account as long as they adhere to the annual contribution limit. So don't forget to ask before they make a contribution to make sure they will not exceed their allowable contribution room.
• Don't forget unused contribution room from previous years can be carried forward and used in future years.
• Maximize household deposits - spouses can give each other money to contribute to each other's TFSA without affecting their contribution room.
• In a province where the legal age to enter a contract is 19? The contribution room counts when they are 18, so they are eligible to deposit double in their first year.
• If a spouse is named as the sole beneficiary of the TFSA the spouse has the option of becoming the sole survivor of the plan. This means that they become the planholder and may exercise all of the planholder rights including the right to designate a beneficiary.
• The contribution to a TFSA must come from either owner. We will accept a cheque drawn on a joint bank account provided the TFSA owner is one of the bank account holders. For example, a client cannot deposit a cheque into his or her adult child's TFSA or a cheque drawn on an individual's company account cannot be deposited to their personal TFSA.

Sample savings and retirement annual statement

Sun Life Financial Trust Inc. at a glance

Sun GIC Max

• pays the accumulated value, as of the date of death.

Guaranteed Investment Certificate (GIC)

• pays the cash value as of the date of death if the policy was issued prior to November 25, 2013.
• pays the accumulated value as of the date of death if the policy was issued on or after November 25, 2013.

Non registered

• Beneficiary designations are not allowed.
• For an individually held contract, the value (as above) will be paid to the owner's estate.
• For a jointly-held contract with rights of survivorship, the GIC will become the sole property of the surviving owner. The surviving owner must provide proof of the death of the deceased owner. The rights of survivorship are not available in Quebec.
• For a jointly-held contract with tenants in common, the GIC will become the property of the surviving owner and the estate of the deceased owner. The personal representative of the deceased owner must provide proof of death.

Registered Retirement Savings Plan (RRSP)

• Beneficiary designations are allowed in all jurisdictions except Quebec.
• Upon the death of the owner, the value (as above) will be paid to the named beneficiary or the owner's estate if no beneficiary designation has been made.
• In Quebec the value (as above) will be paid to the estate of the deceased.
• Proof of claim and the right to receive the benefit must be provided.

Registered Retirement Income Fund (RRIF)

• Beneficiary designations are allowed in all jurisdictions except Quebec.
• Upon the death of the owner, the value (as above) will be paid to the named beneficiary or the estate if no beneficiary designation has been made.
• In Quebec the value (as above) will be paid to the estate of the deceased.
• Proof of claim and the right to receive the benefit must be provided.

Successor contractholder

If the owner elected their spouse to be the successor contractholder, then upon their death the spouse will become the contractholder and will have all rights under the plan, including the right to designate a beneficiary.

Tax Free Savings Account (TFSA)

• Beneficiary designations are allowed in all jurisdictions except Quebec.
• Upon death the client's TFSA tax-free status ends and any investment growth or interest earned after the date of death is taxable. This tax will be due the end of the calendar year following the year of death.

Spouse named as sole beneficiary

If a spouse is named as the sole beneficiary they have the option of becoming the successor holder of the plan. This means they become the planholder and may exercise all of the planholder rights including the right to designate a beneficiary. In this case investment growth and interest earned after the date of death continue to be tax-free.

If the spouse chooses not to become the planholder they may choose to transfer the assets to their own TFSA. This transfer will not affect their contribution room as long as they elect this option before the end of the year following the year of death. They must complete and file a government prescribed form RC240 - Designation of an exempt contribution - Tax-Free Saving Account (TFSA) within 30 days of the transfer of funds to their TFSA plan.

If they do not wish to transfer the assets or become the planholder, the proceeds can be paid to them in cash. Any interest earned on the funds after the date of death would be taxable to the surviving spouse in this case.

Spouse not named as sole beneficiary

If the spouse is not the sole beneficiary, the value of the plan on the date of death is paid to the beneficiary(ies) in a lump sum. Any interest earned after the date of death will be taxable to the beneficiary.

For Quebec or if no beneficiary is named, the value of the plan is payable to the planholder's estate. Tax is payable on interest earned after the date of death. This tax is reported by the original TFSA planholder's estate.

First sixty-day receipt information for Superflex and GIC products

General tax information for guaranteed savings TFSA

Marriage breakdown and removal of spousal designation

Tax-free savings account (TFSA) - taxation upon death

Tax-free savings account (TFSA) held by non-residents

Tax slip and receipt mailing schedule for all Individual products

Taxation on non-registered GIC products

Withholding tax on withdrawals from an RRSP

Withholding tax rates around the world