How to file a trust return
Some trusts that filed a T3 return after March 30 and before April 3, 2024 with a T3SCH15 (Beneficial Ownership Information of a Trust) have been charged a penalty in error. We are currently reassessing affected accounts to remove the penalty and a notice of reassessment will be issued.
Bare trusts are exempt from trust reporting requirements for 2023. Find out more: New – Bare trusts are exempt from trust reporting requirements for 2023 - Canada.ca.
New reporting requirements for trusts
All trusts, unless specific conditions are met, must file a trust return for tax years ending after December 30, 2023. Many trusts, will need to file for the first time.
If you need a trust account number, visit our Trust Account Registration online service within:
Methods to file
Efile:
Tax preparers filing more than five of the returns listed above need to use EFILE. If you are an individual, a corporation, or a partnership and you are accepting payment to prepare returns, you are considered a tax preparer. Note that an employee who prepares tax returns as part of their work duties is not considered a tax preparer.
The Trust EFILE service is open for transmission from February 19, 2024, until January 24, 2025. Initial tax returns that you can file using EFILE:
For tax years 2021 and later:
- T3RET – T3 Trust Income Tax and Information Return
- T3ATH-IND – Amateur Athlete Trust Income Tax Return
- T3M – Environmental Trust Income Tax Return
- T3RCA – Retirement Compensation Arrangement (RCA) Part XI.3 Tax Return
- T3S – Supplementary Unemployment Benefit Plan Income Tax Return
For tax years 2023 and later:
- T3D – Income Tax Return for Deferred Profit Sharing Plan (DPSP) or Revoked DPSP
- T3P – Employees' Pension Plan Income Tax Return
- T3RI – Registered Investment Income Tax Return
- T3GR – Group Income Tax and Information Return for RRSP, RRIF, RESP, or RDSP trusts
- T1061 – Canadian Amateur Athletic Trust Group Information Return
- T3PRP – T3 Pooled Registered Pension Plan Tax Return
- Section 216 Returns
- Note: You can also EFILE the T2000 - Calculation of Tax on Agreements to Acquire Shares (Section 207.1(5) of the Income Tax Act) with the above returns, where applicable.
The Form T183TRUST Information Return for the electronic filing of a Trust Return must be completed for each initial trust return you transmit. Form T183TRUST must be completed and signed by the trustee, executor, liquidator or administrator prior to transmission of the return for the trust.
For more information about this filing method, go to EFILE for electronic filers.
Trust EFILE exclusions
You cannot file a Trust return electronically in the following situations:
- The return is for a tax year that ends before 2021
- The return is an amended tax return
- The trust does not have a trust account number or cannot provide one in the electronic file
- The trust claimed bankruptcy during the year for which the return is being filed
- Form RC199, Voluntary Disclosures Program (VDP) Application
- Form T1273, Statement A - Harmonized AgriStability and AgriInvest Programs Information and Statement of Farming Activities for Individuals and Form T1163, Statement A - AgriStability and AgriInvest Programs Information and Statement of Farming Activities for Individuals are excluded from T3 EFILE.
- T3 NB-SBI, T3 New Brunswick Small Business Investor Tax Credit.
- T3SK CG, Saskatchewan Farm and Small Business Capital Gains Tax Credit (Trusts).
- T3PFT, T3 Provincial or Territorial Foreign Tax Credit.
- Business income tax paid to more than 3 foreign countries on Form T3FFT, T3 Federal Foreign Tax Credits for Trusts.
- Non-business income tax paid to more than 3 foreign countries on Form T3FFT, T3 Federal Foreign Tax Credits for Trusts.
- More than 12 Selected Financial Data (SFD).
- A claim for Return of fuel charge proceeds to farmers tax credit for a 2021 tax year.
- A claim for Yukon Business Carbon Price Rebate for a 2021 tax year.
- T2223, election, under subsection 159(6.1) of the income tax act, by a trust to defer payment of income tax.
By Mail:
Send any of the trust returns listed above by mail to the appropriate tax centre. For more information, go to Where to file a trust return.
Penalties
If you do not file an annual trust return and you are required to, penalties could apply.
As of January 1, 2024, tax preparers filing more than five trust returns of the same type need to use EFILE. If more than five trust returns of a same type are filed by paper, penalties could apply and could be as much as $25 for each paper return above the limit. Find out more information on Mandatory electronic filing for tax preparers.
Note that there are also mandatory thresholds and different penalties for filing T3 information returns (slips) by paper. Find out more about Filing information returns electronically.
Supporting documentation for online filing
In this part, all elections, designations, agreements, waivers, and special elective returns are referred to as elections.
Elections and supporting documentation
The Income Tax Act provides for various elections to be made. Some are made on authorized Canada Revenue Agency (CRA) forms. Others are made by providing specific information in a letter or note.
Elections and Form T1135, Foreign Income Verification Statement, have to be sent only if they apply to the return you filed. You do not have to send any other supporting document when filing online. Keep all documents used to prepare a return, such as books, records, forms, schedules, and receipts for six years. Be ready to send your documents to the CRA on request.
All elections, including the supporting documentation, must be submitted to the CRA in writing or through the Submit documents online service. For an election to be considered valid, it must be submitted by the due date established in the Income Tax Act.
When submitting this documentation:
- Clearly state the trust name and the trust account number on all the election forms and letters
- Clearly indicate in the covering letter that the documentation is submitted to support the trust's electronically filed return
All other documentation used to prepare the return, excluding elections as indicated, is to be kept and sent to the CRA only if requested.
For more information on other documents available for electronic filing, see Submitting and filing documents online related to T3.
Where to send supporting paper documents
With the exception of Form T1135, all paper documentation to support elections should be sent to the tax centre that serves the area where the legal representative lives. Each election form and letter should include the trust's name, representative's name, address, and trust account number. A covering letter should also be included that indicates the documentation is to support the trust's electronically filed return.
Send your completed Form T1135, Foreign Income Verification Statement, to the tax centre address shown on the form.
Beneficial Ownership Legislation
New legislation in Bill C-32 received Royal Assent on December 15, 2022. The beneficial ownership reporting requirements are effective for taxation years ending after December 30, 2023. For 2023 and subsequent taxation years, all non-resident trusts that currently have to file a trust return and all express trusts that are resident in Canada, with some exceptions, will have to provide additional information on an annual basis. An express trust is generally a trust created with the settlor's express intent, usually made in writing. As a result, for the 2023 and subsequent taxation years, certain trusts will have to file a trust return where currently they do not have to file a trust return.
Exceptions from having to provide additional information
The following types of trusts (that are either resident in Canada, or non-resident but required to file a trust return) are not required to provide additional information:
- mutual fund trusts, segregated funds and master trusts
- trusts governed by registered plans (i.e., deferred profit sharing plans, pooled registered pension plans, registered disability savings plans, registered education savings plans, registered pension plans, registered retirement income funds, registered retirement savings plans, registered supplementary unemployment benefit plans and tax free savings accounts)
- lawyers' general trust accounts
- graduated rate estates and qualified disability trusts
- trusts that qualify as non-profit organizations or registered charities
- trusts that have been in existence for less than three months
- trusts that hold less than $50,000 in assets throughout the taxation year (provided that their holdings are confined to deposits, government debt obligations and listed securities).
Additional information that will have to be provided
- the identity of all trustees
- beneficiaries and settlors of the trust
- each person who has the ability (through the trust terms or a related agreement) to exert control or override trustee decisions over the appointment of income or capital of the trust (e.g., a protector)
This change is being made to improve the collection of beneficial ownership information with respect to trusts.
What is an express trust?
An express trust is generally a trust created deliberately (with express intent), by a settlor, usually in writing.
It is accepted at common law that an express trust cannot be established unless three certainties are present, namely the certainty of:- the intent to create a trust;
- the property to be placed in trust; and
- the identity of the beneficiaries of the trust.
A settlor intends to set up a trust transfers property to the trust and identifies a beneficiary or beneficiaries.
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