If you distribute any trust‑related information slip to a recipient late, the penalty is $25 a day for each day the slip is late, from a minimum of $100 to a maximum of $2,500, for each failure to comply with this requirement. A corporation and another person or two corporations may also be related persons. Clearly indicate the type of loss in the footnote area below box 26 on the T3 slip, We consider income that was not paid or payable to a beneficiary to be, the trust is resident in Canada throughout the year, the beneficiary is under 21 years of age at the end of the year, the beneficiary's right to income is vested by the end of the year, it did not become vested due to the exercise or non-exercise of a discretionary power by any person, and it is not subject to any future condition other than the condition that the beneficiary survive to an age of not more than 40 years. A trust and a preferred beneficiary can jointly elect to have the trust's accumulating income taxed in the hands of the preferred beneficiary. Filing an objection is the first step in the formal process of resolving a dispute. You do not have to submit any other supporting documentation when filing online. For 2016 and subsequent tax years, only a graduated rate estate and a communal organization that is treated as a trust can designate all or part of its deductible ITC amount to one or more of its beneficiaries, taking into consideration the terms of the trust. A non-resident may file a separate T3 Return pursuant to an election under section 216 in respect of its net rental or timber royalty income. If the trust was a trust identified as code 322, 335, or 336 and the trust is continued after the death of the last surviving lifetime beneficiary (either the settlor, or the spouse or common-law partner, as the case may be), use trust type code 300 (other trust) on all T3 returns filed for a tax year ending after the date of death. Use the provincial or territorial forms package for the province or territory where the trust was resident on the last day of its tax year. T3 Program Note: A non-profit organization may have to file Form T1044, Non-Profit Organization (NPO) Information Return. For 2018 tax and later years, the tax on split income will also apply to individuals over the age of 17, but only with respect to certain income derived from a related business. T3 Trust Returns Program You have to enter the trust's account number, if we have assigned one. For more information about the dates, see the next section Deemed disposition day. For enquiries, contact us. For more information, see Guide RC4120, Employers' Guide – Filing the T4 Slip and Summary. The trust has to pay minimum tax if it is more than the federal tax calculated in the usual manner. Spouse – this applies only to a person to whom you are legally married. If a future T3 return is filed, we will assume the trust no longer meets the above conditions. If they become law as proposed, they will be effective for 2020 or as of the dates given. For each type of property or expenditure made by the trust in the year that is eligible for the investment tax credits (ITC), prepare a separate T3 slip for each designation to beneficiaries. receives from the trust property any income, gain, or profit that is allocated to one or more beneficiaries, and the trust has: total income from all sources of more than $500, income of more than $100 allocated to any single beneficiary, made a distribution of capital to one or more beneficiaries, allocated any portion of the income to a non-resident beneficiary, If the trust allocated amounts to resident beneficiaries, file the, If the trust paid executor, liquidator, or trustee fees, or if an employee benefit plan or an employee trust made distributions other than a return of employee contributions, file a, If the trust paid scholarships, fellowships, bursaries, prizes, or research grants to a resident of Canada, file a, If the trust paid or credited, or is considered to have paid or credited, amounts to a non-resident beneficiary, file an, If the trust paid fees to a non-resident of Canada for services performed in Canada and the non-resident acts in the capacity of an executor in the course of a business, file a, a return for any taxation year before 2017, you are filing a T3 return for the first time with the CRA and the CRA has not assigned you a trust account number, the trust is reporting taxable income, tax owing, or refundable credits, the trust went bankrupt in the year (does not include a proposal for bankruptcy), legal representative (trustee/executor/administrator), alternate mailing address, if different from the legal representative’s address, direct deposit information (nor can you request direct deposit), the trust is a specified investment flow-through (SIFT) trust (Type of trust code 338), for the related tax year, the trust is subject to deemed dispositions as detailed on Form T1055, Summary of Deemed Dispositions – 2002 and later tax years. For example, there are two exceptions to this rule. If you allocate the total death benefit to more than one beneficiary, apportion the amount eligible for this exclusion among those beneficiaries. Tax Season 2016 is due to kick off on 1 July, meaning it is time for taxpayers to submit their returns for income earned between 1 March 2015 and 29 February 2016. Enter the beneficiary's share of the amount from line 926 of Schedule 9. Enter investment counsel fees paid (paragraph 20(1)(bb)) on line 21. This is the day we consider the trust to have disposed of its capital property, land inventory, and Canadian and foreign resource properties. dividends and interest, capital gains and losses)… For example, where an estate is created in June 2017, and is a GRE for 2017, 18 and 19, a deemed year-end will occur in June 2020 on the 3 year anniversary of the individual’s date of death. The beneficiary has to include the value of these benefits in income in the year they were paid, unless the value: Enter on line 44, the amount of these benefits that were included as income on the beneficiary's T3 slip. Winnipeg MB  R3C 0N8 If you have misplaced or do not have a WAC, go to Filing Information Returns Electronically to access our web access code online service. This section will describe how to … This also applies to both of the following: Trust other than a personal trust – When this kind of trust distributes property to a beneficiary and there is a resulting disposition of all or part of the beneficiary's capital interest in the trust, we consider the trust to have received proceeds of disposition equal to the property's FMV. If you wind up a graduated rate estate, the tax year will end on the date of the final distribution of the assets. For more information, see Information Sheet RC4169, Tax Treatment of Mutual Funds for Individuals. All you need is a web browser to connect to the Internet, and your software will create, print, and save your electronic return in XML format. Box 49 on a T3 slip and box 24 on a T5 slip show the actual amount of eligible dividends. For more information, see Guide RC4120, Employers' Guide – Filing the T4 Slip and Summary. The total of lines 921 to 926, plus line 949 is the income allocated to the beneficiaries. Our publications and personalized correspondence are available in braille, large print, e-text, or MP3 for those who have a visual impairment. In this case, the trust is taxable on its income from property, and on any taxable capital gains from the disposition of any property that is not used to provide those services. Do not include, on line 85, any tax withheld on income earned by the trust. If the trust donates an obligation of the trust or of a related person, a share issued by a corporation related to the trust, or any other security issued by a person related to the trust, call 1-800-959-8281. A trust is deemed to have disposed of its capital property (other than exempt property), land inventory, and Canadian and foreign resource properties on specified dates called deemed disposition days. Accumulating income is calculated as if you have deducted the maximum amount of income that became payable in the year to the beneficiaries. File trust income tax, and get information about T3 slips, refunds, and payments. If this applies to the trust, complete lines 28 to 47 at the bottom of Part B. The tax year in which the non-capital loss was incurred will affect the extent to which you can carry over the unused portion. The trust ceases during the year to have among its beneficiaries any individuals who in one or more earlier tax years of the trust were electing beneficiaries of the trust. The federal and provincial or territorial penalties are each equal to the lesser of: However, if you voluntarily tell us about an amount you failed to report, we may waive these penalties. For more information and how to calculate the amount to be entered on lines 7 and 8, go to Pamphlet P113, Gifts and Income Tax, and Income Tax Folio S7-F1-C1, Split-receipting and Deemed Fair Market Value. You can provide recipients with a digital copy of their T3 slips only if the recipient gives you their consent in writing or by email. For the year indicated, include a schedule showing all of the trust’s assets and specifying allocation of assets between the resident portion trust and the non-resident portion trust. Enter on the appropriate lines, the trust's gross and net income or loss from business, farming, fishing, and rentals. As trustee, you have to complete a T3 slip, for each resident beneficiary, including a preferred beneficiary, to whom the trust allocated income in the year. Your authorized representative can access this online service through Respresent a Client. Federal Political Contribution Tax Credit. You may not have to file a T3 return if the estate is distributed immediately after the person dies, or if the estate did not earn income before the distribution. For exceptions to this general rule, see Exceptions and limits to income allocations. Calculate the trust’s eligible taxable capital gains on Schedule 3. Enter the trust's total income or losses resulting from deemed dispositions from line 42 of Form T1055, Summary of Deemed Dispositions (2002 and later tax years). You have to keep your books, records, and supporting documents in case we need to verify the income or loss you reported on the return. If the two individuals do not deal at arm's length, you will normally be required to report the income from that loaned property or any property substituted for it on the trust's return. All property held in connection with a PRPP is required to be held in trust by the administrator on behalf of the plan members. Most amounts paid or payable to non-resident beneficiaries are subject to a Part XIII withholding tax. Please note that you may hear a beep and experience a normal connection delay: 10% of the amount you failed to report on your T3 return for 2020, 50% of the difference between the understated tax (and/or overstated credits) related to the amount you failed to report and the amount of tax withheld related to the amount you failed to report, 50% of the understated tax and/or the overstated credits related to the false statement or omission, an international money order drawn in Canadian dollars, a bank draft in Canadian dollars drawn on a Canadian bank, three years (four years for mutual fund trusts) from the date of your original notice of assessment or a notice that no tax was payable for the tax year (this period is called the "normal reassessment period"), six years (seven years for mutual fund trusts) from the date of your original notice of assessmen. Tax season may never be your favourite time of year, but proper planning can make completing your tax return a little less stressful. This credit is available to a resident trust only for foreign income or profit taxes the trust paid on income it received from sources outside Canada. To file your T3 return over the Internet using the Internet file transfer, you will need a web access code (WAC). For 2016 and subsequent tax years, the $40,000 basic exemption is applicable to graduated rate estate only. Without your signature or the tax practitioner’s Each case will depend upon its own facts. Enter amounts that the trust received from any of the following: When an amount is considered to have been distributed to an estate from a foreign retirement arrangement according to the laws of the country where the arrangement was established, the payment is also deemed received by the estate for tax purposes in Canada. If this is the case, any income or loss, or any taxable capital gain or allowable capital loss, from that property is generally income of the trust. Use this line to indicate the amount of previously unclaimed cultural and ecological gifts that you are currently applying to the last two tax years of the deceased individual (the final return and the return for the preceding year). If you enter inter vivos code 300, for other trust, you must specify the type of trust on the “Other inter vivos trust (specify)” line. If you are deemed to have a capital gain as a result of a negative adjusted cost base (ACB), use this line to report the deemed gain. Returns submitted via post: The return must be signed by you or the tax practitioner if he/she completes and submits the tax return on your behalf. The refund or balance owing is the difference between the total taxes payable on line 84 and the total credits on line 93. Proposed changes to legislation announced. the CRA's digital services are fast, easy, and secure! A resident trust may carry on a business with a permanent establishment in one of the following: In these cases, you have to calculate the trust's income from each source to determine the liability for one of the following: Report income from a business for each province, territory, or foreign country in which the business had a permanent establishment during the tax year. For more information on the deductibility of farming or fishing losses, see Chapter 6 – Losses in Guide T4002, Self-employed Business, Professional, Commission, Farming, and Fishing Income. Use this section if the tax-free savings account (TFSA) trust, registered retirement savings plan (RRSP) trust, registered retirement income funds (RRIF) trust, registered disability savings plan (RDSP) trust, or registered education savings plan (RESP) trust held non-qualified investments during the tax year. Use Part B of Schedule 9 to report designated amounts. Calculate the amount of Part XII.2 tax that you attribute to non-resident beneficiaries. The trust's federal foreign tax credit may be less than the tax paid to a foreign country. Report the total trust income you allocated to a non-resident beneficiary as estate and trust income on the NR4 return. Note: An employee benefit plan has to file a T3 return if the plan or trust has tax payable, has a taxable capital gain, or has disposed of capital property. If you do not have the information slips you need to complete the return when it is due, estimate the income. Pay any Part XII.2 tax no later than 90 days after the trust's tax year-end. In addition, all of the following conditions have to be satisfied: For a trust that was a qualified disability trust in a previous tax year, refer to Line 11 – Federal recovery tax. We consider dividends credited to the trust's account by a financial institution to have been received by the trust, even if the trust did not receive a T3 or T5 slip. For more information, see below or go to Trust types and codes. Do not claim them as deductions from the trust's income. Attach a letter providing details. 100% accurate. Winnipeg Tax Centre However, when you combine the slips, you have to do all of the following: Send your digital submission in either *.pdf or *.jpg format to customized-hors-series@cra.gc.ca. For a mutual fund trust that is a public trust, or public investment trust, there are certain reporting requirements these types of trusts must meet. Include the amount of any taxable benefits to resident beneficiaries under the trust, unless the amounts are included on lines 921, 923 or 949. For information on these types of losses, see Line 25 – Allowable business investment losses (ABIL). A trust’s “equity” for the purposes of the thin capitalization rules will generally consist of contributions to the trust from specified non-residents plus the tax paid earnings of the trust, less any capital distributions from the trust to specified non-residents. Mailing address – We may modify part of your address to meet Canada Post's requirements. To enrol for direct deposit or to update a trust’s banking information, the trustee or other authorized person can complete Form T3-DD Direct Deposit Request for T3, and send it to the CRA. To use the Web Forms application, you must have a web access code. A trust can increase its total donations limit if it donates capital property in the year. If the trust pays out non-taxable dividends to its beneficiaries, inform the beneficiaries that they should not include these dividends in income. Calculate the dividend tax credit for dividends other than eligible dividends by multiplying the gross-up amount from line 31 of Schedule 8 by 69.2308%. A beneficiary may have applied for but has not yet received a SIN, a business number and program account, or a trust account number, or the beneficiary may refuse to give you the number. Participants in the Agri-Quebec program must also include in income, any amounts withdrawn from their Agri-Quebec Fonds 2. If the beneficiary is an individual or a trust (other than a registered charity), enter 9.0301% of the amount in box 32. Include this number on all correspondence related to the trust to simplify dealings with us. Make the trust’s designation on Form T1079, Designation of a Property as a Principal Residence by a Personal Trust. For more information, see Deemed disposition. Employee contributions are permitted, but are not deductible. If the trust is a non-resident trust with investments in Canadian mutual funds, it may have paid Part XIII.2 tax during the tax year. Enter the beneficiary spouse's or common-law partner's share of the amount from line 931 of Schedule 9. Personal trust – When this kind of trust distributes property to a beneficiary, and there is a resulting disposition of all or part of the beneficiary's capital interest in the trust, we generally consider the trust to have received proceeds of disposition equal to the "cost amount" of the property. If you need more information after reading this publication, go to Canada Revenue Agency or call 1-800-959-8281. What if I receive income from two sources? A spousal or common-law partner trust, a joint spousal or common-law partner trust, or an alter ego trust if it reports in the year its first deemed disposition on Form. This measure applies to tax years that begin after 2013 and applies with respect to existing as well as new borrowings. For example, if the trust's inclusion rate was 1/2, the inverse is 2. If the trust designated the taxable dividends to beneficiaries, the tax payable by the beneficiaries may be reduced. If an information slip is not available, attach a statement from the issuer, indicating the income reported and the tax withheld. Question 10 – A yes response to this question only applies to a mutual fund trust. Type or print the information on the slip. Use this section to report a capital gain or loss when the trust sells mutual fund units, shares, or securities that are not described in any other section of Schedule 1. The late‑filing penalty will be higher if we issued a demand to file the T3 return, and we assessed a late‑filing penalty for any of the three previous years’ returns. File this return no later than 90 days after the end of the trust's tax year. If the trust is reporting capital gains or losses, it has to report the full amount (that is, 100%) on line 01 of the T3 return. You have to withhold and remit tax on these amounts. Multiply the amount on line 29 by 15% for 2020 for dividends other than eligible dividends, and enter the result on line 31. If you have questions about the assessment of the trust's return, we may also ask you for information about the return, for the date that your company was appointed as trustee, if you are an employee of a corporate trustee, the name, address, and account number of the trust, your representative's name (only the business name of a firm or partnership need appear, unless authorization is to be restricted to a certain member) and telephone number, the tax year or years to which the authorization, or cancellation of the authorization, applies, your signature and title as the authorized signing person (trustee, executor, administrator, or liquidator), your telephone number, and the date. immediately before the death of the deceased individual, the taxpayer meets one of the following conditions: was both a spouse or common-law partner of the deceased individual and mentally infirm, was both a child or grandchild of the deceased individual and dependent of the deceased individual for support because of mental infirmity. If you need more room to include an explanation in this area, prepare a separate statement and attach a copy to each copy of the slip. Types of income, except for taxable capital gains from a mutual fund trust, lose their identity when allocated to a non-resident beneficiary. Answer all the questions on page 2 of the T3RET, T3 Trust Income Tax and Information Return. For rules about testamentary trusts created before November 13, 1981, call 1-800-959-8281. For more information, see Income Tax Folio S5-F2-C1, Foreign Tax Credit, archived  Interpretation Bulletin IT-201R2, Foreign Tax Credit – Trusts and Beneficiaries, and see Line 23 – Federal foreign tax credit. Visit our COVID-19 site for latest information regarding how we can support you. To arrange security, call 1-800-959-8281. Failure to provide the trust account number, Form T3-DD, Direct Deposit Request for T3, Non-resident trusts and deemed resident trusts, Repeated failure to report income penalty, Step 1 – Identification and other required information, Step 2 – Calculating total income: Lines 01 to 20, Step 3 – Calculating net income: Lines 21 to 50, Step 4 – Calculating taxable income: Lines 51 to 56, Step 5 – Summary of tax and credits: Lines 81 to 100, Schedule 1 – Dispositions of Capital Property, Schedule 8 – Investment Income, Carrying Charges, and Gross-up Amount of Dividends Retained by the Trust, Schedule 9 – Income Allocations and Designations to Beneficiaries, Exceptions and limits to income allocations, Schedule 10 – Part XII.2 Tax and Part XIII Non-Resident Withholding Tax, Schedule 11A – Donations and gifts tax credit calculation, Filing using computer-printed (customized) forms, Amending, cancelling, adding, or replacing T3 slips, Amending or cancelling slips over the Internet, Submitting and filing documents online related to T3, T3RET Trust Income Tax and Information Return, T3 slip, Statement of Trust Income Allocations and Designations, T3SUM Summary of Trust Income Allocations and Designations, Income Tax Folio S6-F1-C1, Residence of a Trust or Estate, Income Tax Folio S1-F5-C1, Related Persons and Dealing at Arm’s Length, Income Tax Folio S7-F1-C1, Split-receipting and Deemed Fair Market Value, Information Circular IC78-5R3, Communal Organizations, Interpretation Bulletin IT-502, Employee Benefit Plans and Employee Trusts, Guide RC4120, Employers' Guide – Filing the T4 Slip and Summary, Guide RC4120, Employers' Guide – Filing the T4 Slip and Summary, Interpretation Bulletin IT-83, Non-Profit Organizations – Taxation of Income From Property, Form T1044, Non-Profit Organization (NPO) Information Return, Guide T4117, Income Tax Guide to the Non-Profit Organization (NPO) Information Return, The Pooled Registered Pension Plan (PRPP), Guide T4041, Retirement Compensation Arrangements Guide, Form T3-RCA, Retirement Compensation Arrangement (RCA) – Part XI.3 Tax Return, Interpretation Bulletin IT-529, Flexible Employee Benefit Programs, Guide RC4120, Employers' Guide – Filing the T4 Slip and Summary, Specified investment flow-through trust income and distribution tax. If you claimed a reserve in 2019, you have to bring it back into the trust's income in 2020. On line 471, enter the amounts paid or payable to beneficiaries in the current year, including any amount designated by a preferred beneficiary election. Do not include non-taxable dividends (see Lines 7 to 12 – Other investment income), or capital gains dividends that you report on line 10 of Schedule 1. For more information, see archived Interpretation Bulletin IT-369R, Attribution of Trust Income to Settlor, and its Special Release. If the trust donated certain types of capital property to a registered charity or other qualified donee, the trust may not have to include in its income any amount of capital gain realized on such gifts. For more information, see Information Circular IC82-2R2, Social Insurance Number Legislation That Relates to the Preparation of Information Slips. If you do not have a reference or case number click on the link “You may be able to submit documents without a case or reference number.”. If the account number on the trust's receipt is not the same as the one on page 1 of the return, enter the account number from the receipt to the right of line 85. If a deemed disposition occurs, the trust is considered to have done both of the following: For depreciable property, the trust has to report both capital gains and recapture of capital cost allowance. Therefore, you have to total and report them as "Gross income" in box 16 of the NR4 slip. In these cases, do not delay filling out the information slip beyond the filing due date. Use the chart below to calculate the reduction in business investment loss. In this case, it may be subject to the federal surtax. Where conditions are met, the zero inclusion rate will apply to any capital gain realized on the deemed disposition of the property immediately before the individual’s death reported on the individual’s final return as well as to any capital gain realized by the estate on the transfer of the property to the qualified donee. You make this choice by indicating on line 472 of the T3 return for the year that you are making a designation under subsection 104(13.1). This is usually the cost of the property plus expenses incurred to obtain it. The most common situations that may make a trust liable to minimum tax are if it: For tax years ending after December 31, 2011, a trust’s limited partnership loss is restricted only if the trust’s interest in the partnership is a registered tax shelter. For more information, see the definition of Arm’s length. For more information, see Information Circular IC75-2R9, Contributions to a Registered Party, a Registered Association or to a Candidate at a Federal Election. Any amount of tax withheld, as shown on the trust’s information slips, is to be reported on line C. See the following section. a trust, the specified beneficiary of which for the year is an individual: who has not reached 18 years of age before the end of the year, who is resident in Canada during the year. You can deduct the elected amount from the trust's income, up to the amount of the accumulating income. For this reason, we follow certain procedures before giving out information about the trust. For more information, see archived Interpretation Bulletin IT-524, Trusts – Flow-Through of Taxable Dividends to a Beneficiary – After 1987. Generally, you can deduct expenses if they were paid to earn income for the trust. A net capital loss carryback is deductible in computing a trust’s taxable income for a previous tax year only to the extent of the trust’s taxable capital gains in that previous year. The trust can deduct amounts paid to employees or former employees for DEBs and can generally carry non-capital losses back or forward three years. You can make a similar designation under subsection 104(13.2) if taxable capital gains are included in the income reported on the trust's return. If the donation is not a one-time payment (for example, a donation that will continue to be made according to the terms of the will), treat the recipient as an income beneficiary and deduct the donation as an allocation of trust income on line 47 of the T3 return. Even if the trust did not receive all of the death benefits in one year, the total tax-free amount for all years cannot exceed $10,000. This refund is available only to a mutual fund trust that has refundable capital gains tax on hand at the end of the year. This payment may qualify as a death benefit, and the trust may be able to exclude up to $10,000 of the amount from income. In these circumstances, the other transfer or loan is considered to be a contribution to the trust by the person or partnership only to the extent that the other transfer or loan can reasonably be considered to have been made in respect of the particular transfer or loan, or the obligation to make the particular transfer or loan. Filing online. Column 3 – income allocated by a preferred beneficiary election. The acquisition of equity in certain types of investment trusts will not be treated as a loss restriction event of the trusts if certain conditions are met. Instead, advise the beneficiary that you have issued these units, as well as the number of units and their value.