Trust Tax Return (T3) You Need to Know
A T3 Trust Income Tax and Information Return is required for certain trusts operating in Canada to report income, distributions, and tax liabilities to the Canada Revenue Agency (CRA). Filing a T3 return is crucial to maintaining compliance with CRA regulations and ensuring that the trust meets its tax obligations.
Who Should File a T3 Trust Tax Return?
A T3 tax return must be filed for a trust if it has:
✔ Taxable income to report during the tax year.
✔ Distributions made to beneficiaries, including income, capital, or dividends.
✔ A tax liability owing to the CRA.
✔ Disposition of capital property, which may trigger capital gains tax.
Types of trusts that may be required to file a T3 return include:
🔹 Testamentary Trusts – Created as a result of a will upon a person’s death.
🔹 Inter Vivos Trusts – Established while the settlor (person creating the trust) is still alive.
🔹 Family Trusts – Used to distribute income and assets among family members.
🔹 Charitable Trusts – Trusts created to support charities and non-profits.
🔹 Bare Trusts – Holding legal title to property while beneficiaries control the assets.
🔹 Graduated Rate Estates (GREs) – The estate of a deceased individual for up to 36 months.
If the trust has no income or distributions, it may be exempt from filing, but it’s always best to confirm with a professional tax service like TaxCan Accounting and Taxes.
When Should You File a T3 Trust Tax Return?
📅 Filing Deadline: The T3 return must be filed within 90 days of the trust’s tax year-end.
For trusts that follow the calendar year (ending December 31), the deadline is March 30 of the following year.
For other trusts with different fiscal year-ends, the deadline is 90 days after the fiscal year-end.
Tax payments are due at the same time as the filing deadline.
Consequences of Failing to File a T3 Trust Tax Return
Failing to file a T3 return on time can result in significant financial and legal penalties, including:
⚠ Late Filing Penalties – CRA imposes a 5% penalty on unpaid taxes, plus an additional 1% per month (up to 12 months) for late filing. Repeat offenses may result in double penalties.
⚠ Interest Charges – CRA applies daily compound interest on any unpaid taxes starting the day after the due date.
⚠ Loss of Tax Benefits – Late or missed filings can disqualify the trust from certain tax exemptions and credits.
⚠ Increased Risk of CRA Audit – Late or inaccurate filings may trigger a CRA audit or further tax scrutiny.
⚠ Legal Liability for Trustees – Trustees are legally responsible for filing T3 returns. Non-compliance can result in personal liability for unpaid taxes.
File Your T3 Trust Tax Return with TaxCan Accounting and Taxes
At TaxCan Accounting and Taxes, we specialize in T3 trust tax return preparation and ensure your filings are accurate, timely, and compliant with CRA regulations.
✔ Accurate and Timely Filing – We prepare and file T3 returns efficiently to avoid penalties.
✔ Maximize Tax Benefits – We help trusts and beneficiaries minimize tax liabilities.
✔ CRA Audit Support – Expert assistance in case of a CRA review or audit.
✔ Electronic Filing (EFILE) – Fast, secure, and CRA-compliant T3 submissions.
Don’t risk penalties or compliance issues. Contact TaxCan Accounting and Taxes today for professional trust tax return services and ensure that your T3 return is filed correctly and on time!