Update On Trust Tax Filings

Geoff Currier

On March 3, 2025 CRA issued an update on the confusing trust filing requirements for tax year 2024. What’s important to know is that when filing of the T3 return, and the T3SCH15 Beneficial Ownership Information of a Trust form is required, the deadline is coming up soon:  March 31, 2025. 

That’s also the day any taxes owing are due.  Following are other need-to-know facts:

Which trusts require enhanced reporting in 2024?   This is broken down into two criteria; the first criteria depends on residency.  A trust that is resident in Canada (including a trust deemed resident in Canada), must file a T3 Return annually, if it:

• Is an express trust, which is a trust created with three certainties:  the settlor's express intent, usually made in writing, the property in question, and the identity of beneficiaries
• For civil law purposes, a trust is other than a trust that is established by law or by judgement.

For all other trusts – resident, deemed resident, non-resident and listed trusts, defined below, a T3 Return is required to be filed for taxation years in which the trust has tax payable.  This includes a trust that, as per CRA:

• is resident in Canada and has either disposed of, or is deemed to have disposed of, a capital property or has a taxable capital gain (for example, a principal residence, or shares in the capital stock of a corporation)

• is a non-resident throughout the year, and has a taxable capital gain (other than from an excluded disposition described in subsection 150(5) of the Income Tax Act) or has disposed of taxable Canadian property (other than from an excluded disposition)
• holds property that is subject to subsection 75(2) of the Income Tax Act
• has provided a benefit of more than $100 to a beneficiary for upkeep, maintenance, or taxes for property maintained for the beneficiary’s use - see page 34 T4013 T3 Trust Guide 2023), or
• receives from the trust property any income, gain, or profit that is allocated to one or more beneficiaries, and the trust has:
  • total income from all sources of more than $500
  • income of more than $100 allocated to any single beneficiary
  • made a distribution of capital to one or more beneficiaries
  • allocated any portion of the income to a non-resident beneficiary

Trusts that don’t require filing.  Certain trusts, including listed trusts and bare trusts, will not require filing in certain situations. 

Obtaining a Trust Account Number.   Except for listed trusts, every trust must file a T3 return and Schedule 15.  This also means that every trust must have a trust account number. Obtaining one is relatively easy, it can be done online and it is instant after the completion of an application form.  The type of information requested includes:

• Step 1 – Trust information – that’s the name of the trust
• Step 2 – Primary trustee information – this can be an individual or a corporation.  The government defines a trustee as a filer, a custodian, an executor, an administrator, or a liquidator who owns or controls property for another person
• Step 3 – That’s a mailing address if different from Step 1.
• Step 4 – Probably the most difficult, is describing the type of trust.  The government refers the applicant to the T4013, T3 Trust Guide for more information.  Also required is the date the trust was created and accompanying legal or trust documentation.
• Step 5 – Certification that the above is true, complete and correct.

Trusts with a capital disposition.  It’s worth noting that the capital gains inclusion rate increases, proposed for June 25, 2024, have been postponed to January 1, 2026, assuming that those proposals will be passed into law, which they are not at the time of this writing.  The rules were to have affected capital gains earned by trusts without access to the $250,000 threshold. In the meantime, however, all capital gains realized before January 1, 2026 will be subject to the currently enacted inclusion rate of one-half, unless an exemption applies. 

But you will note that the forms will continue to refer to Period 1 (pre June 25, 2024) and Period 2 (June 25 forward).  That’s to ensure alignment with the Tslips that were already published prior to the movement of the implementation date of the proposed capital gains tax changes and to administer the increase to the Lifetime capital gains exemption to $1.25 Million.  That provision, which survived the postponement of the proposals, starts with capital dispositions of qualified farm or fishing property and qualified small business corporation shares, in Period 2.

The Tax Forms to Check Out.  The T3 return and T4013 T3 Trust Guide for the 2024 tax year are now online.  The Schedule 15 can also be viewed and downloaded.  CRA notes that it will soon be updating its trust reporting requirements frequently asked questions.

Bottom Line.  Like many provisions in the 2024 tax filing year, it will pay to slow down and review the filing and penalty rules for all T1, T2 and T3 returns, given the upheaval in reporting proposals and postponed legislation that occurred in 2024 and early 2025. 

Next time:  What is a Listed Trust, a Bare Trust and the Penalty provisions for non-compliance.

Additional Educational Resources :

Filing T3 Returns