Originally announced in the 2018 Federal Budget, and first delayed earlier this year, proposed updates to trust reporting have been delayed again. The changes include:
- an obligation to file a return where none currently exists, such as where the trust earned no income in the year
- trusts will be required to report the identity of all trustees, beneficiaries and settlors of the trust
- the identity of each person who has the ability to exert control, through the trust terms or a related agreement, over trustee decisions in respect of the appointment of income or capital must be disclosed
- if a failure to file is made knowingly, or as a result of gross negligence, there will be an additional penalty of five per cent of the maximum fair market value of property held during the year with a minimum of $2,500
Originally intended to apply for 2021 T3 trust returns (due in 2022), this delay results in these rules first applying to 2023 T3 trust returns (due in 2024).
As mentioned above, the penalties for not filing can be severe. While these updates have been delayed multiple times, we do expect them to take effect in 2024 and it will be important to collect the required information for all trusts. If you have any questions about new trust reporting requirements, winding up a trust, or if you may benefit from a trust, please contact a Bateman MacKay Tax and Business Advisor.