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FATCA stands for Foreign Accounts Tax Compliance Act which was enacted by the
United States to provide its Internal Revenue Service (IRS) with an increased ability to
monitor U.S. persons use of financial accounts with Foreign Financial Institutions
(FFIs), i.e. accounts outside the U.S.
Sun Life will be required to identify and report financial accounts held by U.S. persons
or foreign entities in which U.S. persons hold an interest.
How Foreign Financial Institutions (FFIs) like Sun Life will comply with FATCA will
depend on whether the business is in:
Countries without Inter-Governmental Agreements (IGA) with the U.S: Sun
Life will report directly to the IRS.
Countries with a Model 1 IGA: Sun Life will comply under local legislation and
report to their local tax authorities.
Countries with a Model 2 IGA: Sun Life will report directly to the IRS.
Please note that most global financial institutions will be affected by FATCA, not just
Sun Life.
Sun Life is assessing the impact of the FATCA regulations on our business. Sun Life is
participating in various FATCA industry working groups in Canada, U.S., Hong Kong,
Indonesia, and the Philippines to address issues related to the implementation of
FATCA. Sun Life is committed to honoring the privacy of all personal information
provided to us and complying with all applicable laws.
Sun Life is assessing the impact that the FATCA regulation on its business.
A 30% U.S. withholding tax may be imposed against certain payments due to the
offending FFI.
Non-compliance may also result in some reputational risks.
How prepared is Sun Life to deal with the operational changes needed under
FATCA?
SLF Asia Business Units have been reviewing the final FATCA regulations since their
release and revising the business requirements and compliance plans across Asia.
*Having one of the indicia does not mean that the account is owned by a US person.
Yes, FATCA applies to financial accounts, which includes life policies and pension
products with cash values.
My customer is not a U.S. person. What does FATCA mean for him/her?
In most cases, FATCA should have little impact on non-US persons. Sun Life may ask
certain customers to provide additional information or documentation to demonstrate
that he or she is not a U.S. person. Sun Life will communicate as necessary with
affected clients as soon as possible.
If your customer is a U.S. person, he/she may be asked to complete IRS Form W-9
(request for Taxpayer identification Number and Certificate) . Information about the
customer will be reported to the IRS or the local tax authority on an annual basis.
If an IRS Form W-9 is not completed, a tax of 30% may need to be withheld against all
U.S-sourced payments due to your customer.
The document/s to be submitted with the application form will depend on whether the
customer confirms or disputes his/her US status.
My customer who has US indicia does not want to comply with the required
documentation for FATCA. What will happen to his/ her application?
For existing US accounts, what will happen if client will not give us the required
documentation needed for FATCA?
Generally, any existing client whose account is at least $250,000 (life insurance plans)
and $50,000 (mutual funds) that does not comply will be tagged as Recalcitrant and will
be subject to 30% withholding their US sourced income from Sun Life.
Pre-existing accounts are policies issued prior to July 1, 2014 and those who reach the
threshold.
At Sun Life, we take customer privacy very seriously. We are committed to honoring
the privacy of all personal information provided to us in compliance with all applicable
laws. We are carefully reviewing the FATCA regulations to assess their implications on
customers.
Financial Institutions around the globe are impacted by FATCA. Sun Life is not able to
comment on steps that other institutions are taking.
Customers are encouraged to seek advice on FATCA from legal and/or professional
advisors as appropriate.
Employees are prohibited from giving tax advice.
More information on FATCA is available:
- The IRS website: http://www.irs.gov/FATCA