Tax regulations

The overall Common Reporting Standard (CRS) regime was developed in response to the G20 nations’ agreement to cooperate on new global standard for automatic exchange of financial account information between the member countries. The Standard provides for automatic exchange between governments of financial account information to better fight tax evasion and improve tax compliance.

CRS provides standard procedures to be followed by financial institutions to identify and report annually to their local tax authorities certain accounts (Reportable Accounts) held by tax residents of Reportable Jurisdictions, or accounts for certain entities in which such persons have an interest. In turn, the local tax authority will exchange information with other Reportable Jurisdictions with whom they have entered into an agreement and therefore have an obligation to provide information.

CRS applies to all types of financial accounts, including insurance, investments, and business accounts. Over 100+ jurisdictions that have committed to implement CRS and Canada has committed to implement on July 1, 2017 with first exchange of information taking place in 2018.

Effective July 1, 2017, those wishing to purchase policies with a cash value are required to declare their tax residency by completing a Declaration of Tax Residence form (self-certification) as part of the new business application process. There also may be other instances where self-certification will be required by policy owners who already have a policy in-force prior to July 1, 2017, such as conversion of a term policy to a Universal Life policy in addition to a change in ownership of the policy. Each Financial Institution (FI) is obligated to report annually to the CRA. The CRA will, in turn, forward the information to the relevant Reportable Jurisdictions.

In addition, the CRS regulations requires a review of all pre-existing non-individual (entity) cash value insurance and annuity contracts in force as at June 30, 2017 that have a value of $250K or more to determine whether the policy owner is deemed a tax resident of a country other than Canada or the US and subject to CRA reporting.

RBC Life Insurance Company takes your privacy seriously and complies with all relevant privacy rules.

If you have questions about your tax status for tax purposes, or how these changes may affect you, please contact your professional tax advisor. RBC Life Insurance Company does not provide advice regarding the impact of these changes to clients.

Please be aware that each RBC business must undertake due diligence with its clients in respect of CRS. As a result, if you’re a client of more than one RBC business, you may receive separate communications from these businesses.

If you have questions about these new tax regulations and the impact on your policies with RBC Life Insurance Company, please contact your advisor or the RBC Insurance Advice Centre at 1-800-461-1413.

Effective July 1, 2014, the new Canada-U.S. Information Exchange Agreement to improve Cross-Border Tax Compliance came into effect. Both governments agreed to enhance the exchange of information and to provide the U.S. government with information required under U.S. legislation known as the Foreign Account Tax Compliance Act (FATCA).

Under this Agreement and under Canadian law, Canadian financial institutions, such as RBC Life Insurance Company, are required to identify and report information to the Canada Revenue Agency (CRA) on U.S. persons who own or purchase policies with a cash value, such as Universal Life, segregated funds and annuities. The CRA will then exchange the information with the U.S. Internal Revenue Service through the existing provisions and safeguards of the Canada-U.S. Tax Convention.

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For U.S. tax purposes, the definition of a U.S. person includes, but is not limited to:

• A citizen of the U.S., including an individual born in the U.S., but resident in another country, who has not renounced U.S. citizenship
• A lawful resident of the U.S., including a U.S. green card holder
• A person residing in the U.S.
• Certain persons who spend a significant number of days in the U.S. each year. (For example, some Canadian “snowbirds” may be considered U.S. persons. However, the Canada-U.S. tax treaty allows them to claim benefits to be treated as Canadian rather than U.S. taxpayers. Similar relief is provided under many other treaties with the U.S.)
• U.S. corporations, U.S. estates and U.S. trusts

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Effective July 1, 2014, those wishing to purchase policies with a cash value are required to indicate whether or not they are a U.S. person by answering a “self-certification question” as part of the application process. An application won’t be considered complete until this information is provided.

There may also be other instances where “self-certification” will be required for policy owners who already have a policy in force prior to July 1, 2014—for example, when converting a Term policy to a Universal Life policy. (Such transactions are regarded as a “new purchase”.)

RBC Life Insurance Company takes your privacy seriously and complies with all relevant privacy rules.

If you have questions about these new tax regulations and the impact on your policies with RBC Life Insurance Company, please contact your advisor or the RBC Insurance Advice Centre at 1-800-461-1413. If you have questions about your tax status for U.S. tax purposes, or how these changes may affect you, please contact your professional tax advisor. RBC Life Insurance Company does not provide advice regarding the impact of these changes to clients.

Please be aware that each RBC business must undertake due diligence with its clients in respect of FATCA. As a result, if you’re a client of more than one RBC business, you may receive separate communications from these businesses.