diff --git a/config/sns/config.go b/config/sns/config.go
index aaf80d56d5..3913cd0103 100644
--- a/config/sns/config.go
+++ b/config/sns/config.go
@@ -6,6 +6,10 @@ package sns
 
 import (
 	"github.com/crossplane/upjet/pkg/config"
+	awspolicy "github.com/hashicorp/awspolicyequivalence"
+	"github.com/hashicorp/terraform-plugin-sdk/v2/terraform"
+	jsoniter "github.com/json-iterator/go"
+	"github.com/pkg/errors"
 
 	"github.com/upbound/provider-aws/config/common"
 )
@@ -26,5 +30,42 @@ func Configure(p *config.Provider) {
 		// If the topic policy is unset on the Topic resource, don't late initialize it, to avoid conflicts with the
 		// policy managed by a TopicPolicy resource.
 		r.LateInitializer.IgnoredFields = append(r.LateInitializer.IgnoredFields, "policy")
+		r.TerraformCustomDiff = func(diff *terraform.InstanceDiff, _ *terraform.InstanceState, _ *terraform.ResourceConfig) (*terraform.InstanceDiff, error) {
+			if diff == nil || diff.Attributes["policy"] == nil || diff.Attributes["policy"].Old == "" || diff.Attributes["policy"].New == "" {
+				return diff, nil
+			}
+
+			vOld, err := removePolicyVersion(diff.Attributes["policy"].Old)
+			if err != nil {
+				return nil, errors.Wrap(err, "failed to remove Version from the old AWS policy document")
+			}
+			vNew, err := removePolicyVersion(diff.Attributes["policy"].New)
+			if err != nil {
+				return nil, errors.Wrap(err, "failed to remove Version from the new AWS policy document")
+			}
+
+			ok, err := awspolicy.PoliciesAreEquivalent(vOld, vNew)
+			if err != nil {
+				return nil, errors.Wrap(err, "failed to compare the old and the new AWS policy documents")
+			}
+			if ok {
+				delete(diff.Attributes, "policy")
+			}
+			return diff, nil
+		}
 	})
 }
+
+func removePolicyVersion(p string) (string, error) {
+	var policy any
+	if err := jsoniter.ConfigCompatibleWithStandardLibrary.Unmarshal([]byte(p), &policy); err != nil {
+		return "", errors.Wrap(err, "failed to unmarshal the policy from JSON")
+	}
+	m, ok := policy.(map[string]any)
+	if !ok {
+		return p, nil
+	}
+	delete(m, "Version")
+	r, err := jsoniter.ConfigCompatibleWithStandardLibrary.Marshal(m)
+	return string(r), errors.Wrap(err, "failed to marshal the policy map as JSON")
+}
diff --git a/examples/sns/v1beta1/topic-with-policy.yaml b/examples/sns/v1beta1/topic-with-policy.yaml
index b5272f1579..d78e68f941 100644
--- a/examples/sns/v1beta1/topic-with-policy.yaml
+++ b/examples/sns/v1beta1/topic-with-policy.yaml
@@ -5,6 +5,8 @@
 apiVersion: sns.aws.upbound.io/v1beta1
 kind: Topic
 metadata:
+  annotations:
+    meta.upbound.io/example-id: sns/v1beta1/topic
   name: example-topic-${Rand.RFC1123Subdomain}
   labels:
     testing.upbound.io/example-name: sns
@@ -19,7 +21,7 @@ spec:
           "Effect": "Allow",
           "Principal": {
             "AWS": [
-              "arn:aws:iam::123456789110:role/test/project/test/principal1"
+              "arn:aws:iam::153891904029:role/sample-role"
             ]
           },
           "Action": "sns:Publish",
@@ -30,7 +32,7 @@ spec:
           "Effect": "Allow",
           "Principal": {
             "AWS": [
-              "arn:aws:iam::123456789110:role/test/project/test/principal1"
+              "arn:aws:iam::153891904029:role/sample-role"
             ]
           },
           "Action": "sns:GetTopicAttributes",
@@ -41,7 +43,7 @@ spec:
           "Effect": "Allow",
           "Principal": {
             "AWS": [
-              "arn:aws:iam::123456789110:role/test/project/test/principal1"
+              "arn:aws:iam::153891904029:role/sample-role"
             ]
           },
           "Action": "sns:ListSubscriptionsByTopic",
@@ -49,3 +51,29 @@ spec:
         }
         ]
       }
+
+---
+
+apiVersion: iam.aws.upbound.io/v1beta1
+kind: Role
+metadata:
+  annotations:
+    meta.upbound.io/example-id: sns/v1beta1/topic
+  labels:
+    testing.upbound.io/example-name: role
+  name: sample-role
+spec:
+  forProvider:
+    assumeRolePolicy: |
+      {
+        "Version": "2012-10-17",
+        "Statement": [
+          {
+            "Effect": "Allow",
+            "Principal": {
+              "Service": "eks.amazonaws.com"
+            },
+            "Action": "sts:AssumeRole"
+          }
+        ]
+      }
diff --git a/go.mod b/go.mod
index 2a37c79d5e..80d6258f20 100644
--- a/go.mod
+++ b/go.mod
@@ -23,10 +23,12 @@ require (
 	github.com/crossplane/upjet v1.4.1
 	github.com/go-ini/ini v1.46.0
 	github.com/google/go-cmp v0.6.0
+	github.com/hashicorp/awspolicyequivalence v1.6.0
 	github.com/hashicorp/terraform-json v0.21.0
 	github.com/hashicorp/terraform-plugin-framework v1.8.0
 	github.com/hashicorp/terraform-plugin-sdk/v2 v2.33.0
 	github.com/hashicorp/terraform-provider-aws v0.0.0-00010101000000-000000000000
+	github.com/json-iterator/go v1.1.12
 	github.com/pkg/errors v0.9.1
 	gopkg.in/alecthomas/kingpin.v2 v2.2.6
 	gopkg.in/yaml.v3 v3.0.1
@@ -259,7 +261,6 @@ require (
 	github.com/hashicorp/aws-cloudformation-resource-schema-sdk-go v0.22.0 // indirect
 	github.com/hashicorp/aws-sdk-go-base/v2 v2.0.0-beta.53 // indirect
 	github.com/hashicorp/aws-sdk-go-base/v2/awsv1shim/v2 v2.0.0-beta.54 // indirect
-	github.com/hashicorp/awspolicyequivalence v1.6.0 // indirect
 	github.com/hashicorp/errwrap v1.1.0 // indirect
 	github.com/hashicorp/go-checkpoint v0.5.0 // indirect
 	github.com/hashicorp/go-cleanhttp v0.5.2 // indirect
@@ -289,7 +290,6 @@ require (
 	github.com/inconshreveable/mousetrap v1.1.0 // indirect
 	github.com/jmespath/go-jmespath v0.4.0 // indirect
 	github.com/josharian/intern v1.0.0 // indirect
-	github.com/json-iterator/go v1.1.12 // indirect
 	github.com/mailru/easyjson v0.7.7 // indirect
 	github.com/mattbaird/jsonpatch v0.0.0-20230413205102-771768614e91 // indirect
 	github.com/mattn/go-colorable v0.1.13 // indirect