Frequently Asked Questions

How Does The Member Equity Plan Work?

After meeting reserve requirements, the Board of Directors may set aside a portion of earnings for members who have borrowed and saved at SunRise Credit Union.

Allocations are recommended and approved by the Board. Upon approval, the allocation is distributed to the members in the form of surplus shares. This ensures a strong equity base for the future of SunRise Credit Union and also ensures that the members benefit in proportion to their use of credit union services.

What Type of Accounts Qualify For The Member Equity Plan?

SunRise Credit Union will extend participation in the Member Equity Plan to most of our borrowing and saving members.

All interest paid on personal loans, mortgages, lines of credit and business loans qualify for the calculation of allocation of the member equity. All interest received on most of our savings and term deposits qualify for the calculation of allocation of the member equity.

How Much Would Each Member Be Allocated?

Members will be allocated a percentage based on the following:

• Interest paid on loans during the year
• Interest earned on all deposit accounts

This allocation will be credited in the form of surplus shares to individual Surplus Share Accounts. The allocation rate will be dependent on the earnings of the credit union at year end and therefore may vary from year to year. The percentage allocated will vary depending on the business conducted by the member throughout the year. The rate for savings and term deposit interest may be different than the rate for loan and line of credit interest.

Will Allocations Be Made Each Year?

The Board of Directors will decide each year whether earnings warrant an allocation to the Member Equity Plan.

Can A Member Withdraw These Funds?

Generally, an individual’s Surplus Share cannot be redeemed by an active member. Like the $5 membership share, The Surplus Share Account would be your vested interest in the operation of SunRise Credit Union.

The Board of Directors may declare a general redemption at their discretion.

Under What Circumstances Can A Member Withdraw The Funds From The Surplus Share Account?

There are special circumstances under which individual consideration will be given to a complete redemption of the member's surplus shares in the Member Equity Plan such as death of a member, bankruptcy, or dissolution of a company and upon moving and establishing permanent residence outside the province of Manitoba and closing accounts with SunRise Credit Union

What Type Of Statements Would Be Issued And How Often?

All participating members will receive a notice annually advising them of the proportionate amount to their surplus shares. The Member Equity Plan balance will be shown on the regular statements as Surplus Shares.

Would Member Equity Plans Earn Interest?

There will be no interest paid on Member Equity Plans. However, the Board of Directors may allocate dividends to the existing surplus shares that make up Member Equity Plans on an annual basis, depending on the level of earnings achieved by the credit union.

Are Funds Credited to Surplus Share Accounts Guaranteed?

The Member Equity Plan consists of surplus shares that represent true equity, and therefore will not be guaranteed because they are considered risk capital. It is unlikely that Member Equity Plans will have to be called upon due to our credit union's strong level of reserves built up from retained earnings.

What about Income Tax?

An allocation to Surplus Share Accounts based on interest earned on non registered savings plans will be taxable. Therefore, any allocation based on savings and term deposits will be included in the T5 income tax slip issued by SunRise Credit Union.

Each year the board may declare a dividend on surplus share accounts and these dividends are treated like interest and are included in the T5 income slip.

An allocation based on the interest paid on a loan will be taxable only if the loan was for taxable expense, as in the case of a business loan. It will be the responsibility of the member to determine whether that allocation will be taxable and to report it if necessary on their income tax return.

Do All Members Participate In The Program?

All qualifying members paying or receiving interest in a sufficient amount to warrant an allocation of $1 or more will be allocated surplus shares in their Member Equity Plans. However, no member may hold more than 10% of the total number of shares issued by the credit union. Certain accounts may be excluded from participation in the allocation under special conditions, such as when tendering, special quotations or when other special pricing arrangements are involved and organizational accounts.

Why Would The Credit Union Not Charge Less On Loans And/Or Pay More On Deposits So That No Earnings Would Be Generated?

The credit union operates in a constantly changing financial environment and is affected by interest rate changes and other unpredictable changes to income and expenses. It is therefore essential that the credit union build in a margin of safety (capital reserve), in order to be able to handle these fluctuations.

The program helps maintain a strong equity position; allowing the membership to share in the earnings of SunRise Credit Union.