Trust & Estate Filings (T3)

Who must file a T3 return

A trust resident in Canada generally must file a T3 Trust Income Tax and Information Return for each taxation year. Canada's expanded trust-reporting rules now require most express trusts — including many with no income and no activity — to file annually and to disclose every trustee, beneficiary, settlor and controlling person on Schedule 15 (beneficial ownership information). Exemptions exist (for example, trusts in existence less than three months or holding only limited low-value assets), and CRA's administrative positions in this area have shifted more than once — we confirm the current requirement for your trust before every deadline.

Trusts and estates we act for

• Family (inter vivos) trusts — income allocations and designations, attribution-rule review, preferred beneficiary elections and trustee resolutions to paper each allocation.
• Estates and graduated rate estates (GRE) — the GRE designation preserves graduated tax rates for up to 36 months and unlocks donation flexibility; we file each estate-year T3 and plan the wind-up.
• Testamentary and spousal trusts — ongoing compliance, including the deemed disposition on a spousal trust beneficiary's death.
• Bare trusts and nominee arrangements — determination of whether a filing is required under current CRA guidance, and Schedule 15 preparation where it is.
• Alter ego and joint partner trusts — probate-planning structures with their own deemed-disposition timelines.
• Non-resident and deemed-resident trusts — section 94 analysis, T1141/T1142 reporting for contributions to and distributions from foreign trusts.

Estate compliance beyond the T3

Settling an estate usually involves several filings in sequence: the deceased's final T1 (and optional returns such as the rights or things return, which can put a second set of graduated rates and credits to work), the estate's T3 returns for each year of administration, and a TX19 clearance certificate before final distribution — the executor's protection against personal liability for the deceased's unpaid taxes. We manage the entire sequence and coordinate with estate counsel.

Planning points we watch

• The 21-year deemed disposition rule — trusts are deemed to dispose of capital property every 21 years; rollouts to beneficiaries under subsection 107(2) need to be planned well before the anniversary.
• Subsection 104(13.1)/(13.2) designations to tax income in the trust where beneficiaries' rates make that efficient.
• Principal residence held in trust — tightened eligibility rules for the exemption.
• Penalty exposure — the standard late-filing penalty, plus, for the beneficial-ownership rules, a gross-negligence penalty of up to 5% of the maximum value of trust property.