New Reporting Requirements for Trusts – Are you ready?

In the 2018 Budget, new reporting requirements for trusts were proposed to improve the collection of beneficial ownership information, a move designed to improve the Canada Revenue Agency’s ability to assess the tax liability for trusts and their beneficiaries. Some trusts that were not previously required to file a T3 Trust Return will now be required to do so and all trusts filing a T3 Trust Return will be required to provide additional information. These new reporting requirements for trusts come into effect for tax years ending on and after December 31, 2022, so it is important to start preparing now.

Penalties for failing to comply with the reporting requirements are hefty. A penalty of $25 per day of delinquency with a minimum penalty of $100 and maximum of $2,500 will apply. If a failure to file the return was made knowingly, or due to gross negligence, an additional penalty of 5% of the maximum fair market value of property held during the relevant year by the trust will apply. In the case of this latter penalty, a minimum penalty of $2,500 will apply.

If you are unsure if your trust falls into the new reporting requirements, reach out to one of our team. We’d be happy to help review your trust and help you prepare for the new requirements.