There are new reporting requirements for trusts requiring most trusts to file a T3 return, regardless of income or activity levels (with some exceptions, see below). The new reporting requirements were first proposed in the 2018 Federal Budget, and the implementation has been delayed to apply to trusts with taxation years that end after December 30, 2023, and will require disclosure of information about the settlor, trustees, and beneficiaries (including contingent beneficiaries), such as their name, address, date of birth, jurisdiction of residence, and taxpayer identification number (e.g., SIN).
Bare trust arrangements are also subject to the new reporting requirements. A bare trust arrangement may exist where a person is on legal title to a property but is not the beneficial owner. This could be the case if someone is on title for a property that belongs to someone else, like a family member or company.
Certain trusts are excluded from these new rules, including:
- Trusts that have been in existence for less than three months
- Trusts that hold assets with a maximum of $50,000 in fair market value throughout the year (these assets are limited to deposits, government debt obligations, and listed securities)
- Graduated rate estates
- Qualified disability trusts
There are significant penalties for non-compliance, so you should start gathering the required information if these rules apply to you.
How the New Underused Housing Tax Interacts with Trust Reporting
Under the new Underused Housing Tax (UHT) and enhanced trust reporting requirements, the existence of a bare trust can create a filing obligation.
Our trusted advisors encourage you to update your accountant if you are involved in any such arrangements as soon as possible so they may assess if a UHT filing is needed. You should also contact your advisor if you may be part of a bare trust arrangement but are unsure, to confirm if you have any filing obligations.
If you are currently a Crowe MacKay LLP client, fill in the form linked below to automatically flag this with your advisor.
The UHT filing deadline is April 30, 2024.
This article has been published for general information. You should always contact your trusted advisor for specific guidance pertaining to your individual tax needs. This publication is not a substitute for obtaining personalized advice.
If you are looking for Tax Services, Crowe MacKay provides personalized support. Our tax professionals will help you maximize tax-planning opportunities and ensure the minimum amount required by law is paid.