You have to file a T3 return if income from the trust property is subject to tax, and in the tax year, the trust:
- has tax payable
- is requested to file
- is resident in Canada and has either disposed of, or is deemed to have disposed of, a capital property or has a taxable capital gain (for example, a principal residence, or shares)
- is a non-resident throughout the year, and has a taxable capital gain or has disposed of taxable Canadian property
- is a deemed resident trust
- holds property that is subject to subsection 75(2) of the Act
- has provided a benefit of more than $100 to a beneficiary for upkeep, maintenance, or taxes for property maintained for the beneficiary’s use
- 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
- A T3 return must be filed when a trust does not have tax payable, however the trust holds property that is subject to subsection 75(2) of the Act and from which the trust received income, gains or profits during the year.
- A T3 return must be filed when the trusts’ total income from all sources is less than $500, however the trust made a distribution of capital to one or more beneficiaries.
A trust, whose residency status changes, will retain the same trust number.
Where an electing trust has filing obligations under both its resident portion trust and non-resident portion trust, it is required to file these amounts separately under two distinct trust numbers.
You may not have to file a return if the estate is distributed immediately after the person dies, or if the estate did not earn income before the distribution. In these cases, you should give each beneficiary a statement showing his or her share of the estate.
Due date for filing the T3 return
The filing due date depends on the trust’s tax year-end.
You have to file the T3 return no later than 90 days after the trust’s tax year-end.
If the filing due date falls on a Saturday, a Sunday, or a statutory holiday, the CRA will consider it filed on time if it is delivered on, or postmarked, the first working day after the filing due date.
If you fail to file the T3 return by the due date you will be subject to a penalty.
For a graduated rate estate, you have to file the final T3 return and pay any balance owing no later than 90 days after the trust’s wind-up (discontinuation) date.
If you wind up a graduated rate estate, the tax year will end on the date of the final distribution of the assets.
If you wind up an inter vivos trust or a testamentary trust, you have to file the final T3 return and pay any balance owing no later than 90 days after the trust’s tax year-end. However, you may want to file the final return before the trust’s tax year-end.
If you need assistance navigating the intricacies of varying T3 returns, contact GB Pilley & Associates Ltd., Chartered Professional Accountants at 604 926 3522.