Changes to Reporting for Trusts with tax years ending on or after December 31, 2023
Changes for Trust reporting that were announced in Budget 2018 are now coming into effect. The new rules are intended to address tax evasion, money laundering and other financial crimes. With the new rules, fewer trusts will be exempt from filing annual tax returns, and trusts will have to provide more information.
Under the old rules, a trust had to file a trust return only if it had tax to pay, or if it disposed of a capital property, or if it made any income or capital distributions to its beneficiaries. Also, trusts did not have to identify all of its beneficiaries if they never received any income or capital distributions.
Under the new rules, a trust must file a trust return regardless of whether it had any tax to pay, or if it disposed of any capital property, or made any distributions.
Even bare trust arrangements would be subject to the new rules and have to file a T3 trust return. Only certain types of trusts are exempt, which do not apply to most of our clients.
Under the new rules, a new Schedule 15: “Beneficial ownership information of a trust” is included in the trust return that has to be completed. It was supposed to be included in the 2021 trust return but could not be implemented by CRA on time and was deferred to 2022 and then 2023. The new schedule requires details of all the reportable entities of the trust, which includes the trust’s trustees, beneficiaries (including contingent beneficiaries), settlers and controlling persons.
Reportable entities include individuals, trusts, corporations or other entities. Details required are names of the entities, addresses, date of birth in case of individuals, and depending on the type of entity, the SIN number, trust account number, business number or foreign tax identification number.
Late filing penalty, including missing information, remains at $25 for each day late, with minimum penalty of $100 and maximum of $2,500.
The above information is of a general nature only and should not be relied upon for specific situations. Call Marlies Y Hendricks, CPA at 416-766-3941 or submit email enquiry form below