Note: Under the revised legislation set out in Bill C-32, the new trust reporting rules will now apply to trust taxation years that end after December 30, 2023. These rules are not yet law as of this date, but the expectation is that they will be law soon. We will continue to provide you with updates on any developments related to this issue.
As previously outlined in our articles dated December 13, 2021, October 12, 2022 and November 1, 2022, there will be additional reporting requirements for most trusts and many trusts that previously did not have to file a return, will now have to. The good news is that earlier this month, the government deferred this new reporting requirement for another year. These requirements were intended to be applicable with trust returns at December 31, 2022, but the most recent legislation now defers this requirement to returns with a year-end of December 31, 2023.
However, this is not a reason to delay starting the process of gathering the required information and applying for a trust account number for trusts where a return will need to be filed for the first time. It may take some time for Canada Revenue Agency to process the trust application number requests as there will be many trusts that will have to file for the first time in 2023.
To summarize, trusts must disclose the following information for each trustee, beneficiary, settlor or individual with the ability to influence a trustee’s position. The information required includes the following:
- Type of entity
- Date of birth (if applicable)
- Jurisdiction of residence
- Taxpayer identification number (i.e., social insurance number, business number, trust account number, foreign taxpayer identification number)
When identifying settlors of a trust, the proposed rules define a settlor to include both the legal settlor as well as any person who has made a loan or transfer of property to a trust. This includes prescribed rate loans made to trusts, where the lender is considered to be a settlor for purposes of this trust reporting.
Please note that these reporting requirements are also applicable to bare trusts and in trust for accounts as noted in our previous articles.
Changes to Trust Reporting Requirements (November 1st 2022)
Changes to Trust Reporting Requirements (October 12th 2022)
It is important that all trustees, or those who hold legal title to any property on behalf of someone else, prepare now for these reporting obligations that will impact the 2023 T3 returns. We suggest that you start identifying trusts that will be required to file a return for 2023 and begin to gather the required information. In many cases, it will take some time to gather the necessary information. Failure to file the required information will result in the application of penalties, which could be significant, as previously outlined.
We can help you determine how these new reporting requirements may apply to you. Please contact our office to discuss further.