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New Reporting Requirements for Trusts

Posted by David Gobeil on

Some taxpayers have used trusts in complex arrangements to prevent the appropriate authorities from acquiring this required information.

 Even if a trust is required to file a return of income for a year, there is no requirement for the trust to report the identity of all its beneficiaries.

 Given the absence of an annual reporting requirement, and the limitations with respect to the information collected when reporting is required, there are significant gaps with respect to the information that is currently collected with respect to trusts.

The additional reporting requirements proposed in Budget 2018 have not yet been passed into law, but their passage seems inevitable. You should be able to find current information on these requirements at https://www.canada.ca/en/services/taxes/income-tax/trust-income-tax.html 

The new reporting requirements will apply to express trusts that are resident in Canada and to non-resident trusts that are currently required to file a T3 return.

Where the new reporting requirements apply to a trust, the trust will have to file a new schedule with its T3 return to report the identity of all trustees, beneficiaries and settlors of the trust, as well as the identity of each person who has the ability (through the trust terms or a related agreement) to exert control over trustee decisions regarding the appointment of income or capital of the trust (e.g., a protector).

 These proposed new reporting requirements will apply to returns required to be filed for the 2021 and subsequent taxation years.


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