Starting December 31, 2023, significant changes are being made to Canada’s reporting requirements for trusts. Here’s what you need to know about these changes and how they may affect your trust.
Who needs to file
One of the key changes is that more trusts are now required to file an annual return. Prior to these new requirements, trusts that did not generate income, sell capital assets, or distribute income or capital were generally exempt from filing an annual return.
With the updated reporting requirements, many trusts will find themselves obligated to file for the first time.
It’s important to note that not all trusts are subject to these new reporting requirements. Some trusts remain exempt, including trusts that hold less than $50,000 in certain assets and graduated rate estates, among others. Learn more about exempted trusts.
When do the changes take place?
For trusts that are affected by the new requirements, the changes are effective for tax years ending after December 30, 2023. This means that, starting with the tax year ending December 31, 2023, trusts must file an annual T3 Trust Income Tax and Information Return (T3 return) along with a Schedule 15 (Beneficial Ownership Information of a Trust).
How to file
Trusts subject to the new regulations will need to provide additional information about the trust’s structure and beneficiaries. This includes details about trustees, settlors, beneficiaries, contingent beneficiaries and controlling persons, even if they were only reportable entities for part of the year. These changes aim to create more transparency for trusts and their beneficiaries.
To file a T3 return, you’ll need your trust account number. This number should be included on your trust return, as well as on all related correspondence and payments. You can obtain your trust account number instantly by using the Trust Account Registration service through various channels, including My Account, My Business Account, or Represent a Client.
The deadline for filing the T3 return and Schedule 15 is 90 days after the trust’s tax year end. For most trusts, this coincides with the end of the calendar year. Therefore, trusts with a tax year ending on December 31, 2023, must submit their T3 Return and Schedule 15 by March 30, 2024. In case March 30 falls on a weekend, as in 2024, the CRA will consider your return filed on time if received or postmarked by April 2, 2024, the next business day.
For more details about filing deadlines, see the T4013 T3 Trust Guide.
Penalties for non-compliance
Failure to file an annual T3 return when required can result in penalties. It’s essential to stay informed and meet the reporting deadlines set by the CRA.
Questions about the new requirement for trusts?
If you’re unsure how to handle the new reporting requirements for trusts, RHN is here to help. Get in touch with your existing rep or schedule a discovery call to learn how we can help you navigate your filing obligations.
This post has been prepared for general information purposes. It is not advice. The information presented may not fit your unique situation, please consult one of our trusted business advisors at RHN CPA for further clarification and interpretation of your circumstances.