Significant Changes to Trust Reporting and Filing Requirements

16 Dec Significant Changes to Trust Reporting and Filing Requirements

Posted at 10:56h in Tax Planning and Compliance by Team Clearline 16 Dec

The government has changed the annual filing requirements for Trusts, which becomes effective for Trust taxation years ending on or after December 31, 2021. The new requirements are a considerable change from the current rules and carry significant penalties for non-compliance.

What has changed?

Previously, a Trust generally only filed a T3 annual return if it had income, taxes payable, or made a distribution to one of its beneficiaries during the year. Personal information on trustees, beneficiaries and settlors was not reported, except for those beneficiaries receiving an allocation of income.

Now, a Trust must file a T3 annual return regardless of any activity during the year. In addition, each Trust must now report information on all trustees, beneficiaries, settlors, and any person who can exert control or override trustee decisions, including:

name and address
date of birth
country/jurisdiction of residence, and
taxpayer ID, such as SIN, trust account number, business number, or taxpayer ID used in a foreign jurisdiction

What are the penalties for non-compliance?

Penalties for failure to file the T3 annual return are $25/day (minimum $100), up to $2,500. Penalties for knowingly making a false statement or omission of information is the greater of $2,500 or 5% of the highest total fair market value of all the property held by the Trust in the year.

What does this mean for you?

The T3 annual returns prepared under the new rules are due March 31, 2022. Therefore, early in the new year, we will send you our standard engagement letter and summary of the information we have on file, along with any missing details that you need to provide to us. We will prepare the T3 annual returns, review them with you, and file before March 31, 2022.

What is the cost?

Our fees are based on our time needed to compile and complete the T3 annual return. To adapt to these new filing requirements, the first year will require additional time while we gather the information and set up your T3 return. We estimate our fees to be as follows: