New Trust Reporting Rules
December 6, 2023 at 5:00:00 p.m.
The Canadian government has expanded trust rules to include arrangements with family members, corporations, or related parties where you are holding an asset in trust for them
The Canadian government has expanded trust rules to include arrangements with family members, corporations, or related parties where you are holding an asset in trust for them. This includes situations where the asset is registered in your name but is beneficially owned by someone else, such as joint bank accounts.
Our understanding of affected arrangements include bank accounts opened “in trust for” a minor child, parents added to the title of their adult child’s home due to co-signing the mortgage, or an adult child holding title to their aging parents’ home.
New reporting requirements necessitate trustees of a trust, including bare trusts, to file a T3 Trust Income Tax and Information Return annually for tax years ending on or after December 31, 2023. This filing is due 90 days after the year-end and requires detailed information about beneficiaries, trustees, settlors, or protectors of the trust.
Trusts may be exempt if the fair market value of the property is $50,000 or less throughout the year, and the only property in the trust is specific types, such as money, mutual fund units, exchange-traded funds, listed shares, or certain government debt.
Failure to file the T3 return when required incurs penalties, with a current penalty structure set at $25 per day, minimum $100, and maximum $2,500. Additionally, new rules impose a gross negligence penalty of 5% of the maximum property value during the applicable year, with a minimum penalty of $2,500.
If you are uncertain about whether these new reporting requirements apply to your situation, please contact us promptly. Our team is ready to provide guidance and ensure compliance with the updated trust reporting rules.