Canada:
New Requirements for Trust Reporting – A Status Update!
February 22, 2021
Miller Thomson LLP
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The federal government proposed in the 2018 federal budget
Increase the reporting requirements for trusts and impose penalties on
Non-compliance. Later that year the Treasury Department
published the draft tax law on new fiduciary reporting
Conditions. Fast forward to 2021 if the suggestion
Changes to the Income Tax Act (Canada) were intended
take effect and they have not yet been enacted. It is
The bill could possibly be passed in the future
with the changes that take effect for tax years ending on or
After December 31, 2021 it is therefore important to get the
proposed new confidence reporting requirements and potential
Penalties for Violations. You can find information on this in my
Colleague, Article by Nicole Woodward, New Rules for Confidence Reporting and Persistent Trust
Attention.
The proposed new requirements would be cumbersome for trustees
Canada-based Express Trusts (with a few exceptions) and
Trustees of non-resident trusts filing a T3 return as
Trustees would need extensive information on the
Settlers, trustees, beneficiaries, and controlling persons (i.e.
Protector) of these trusts. The specific information for
Each settler, trustee, beneficiary, and protector includes his
Name, address, date of birth (if a person), place of jurisdiction of
Residence and tax identification number. The taxpayer
The identification number contains a person's social security
Number, a company's business number and a CRA account
Number issued to a trust in Canada or a similar account number
issued in the jurisdiction in which the trust is resident.
In addition, if the changes are incorporated into the law, information
through beneficiaries of trusts that should be kept private
becomes public. When there are beneficiaries of a trust
those who do not know that they are beneficiaries receive theirs
Social security numbers can raise questions. Collect the
The required identification information of the beneficiaries can also be proven
challenging where there are beneficiaries whose identity is not
known or detectable. In this case, trustees would have to be
make reasonable efforts to obtain the information, but where to do so
This is not possible; trustees must provide sufficiently detailed information
Information to determine with certainty whether a particular
Person is a beneficiary of trust.
In addition, trustees may resign.
when the trustees do not wish to be subject to such disclosure
Conditions. If you're the trustee of a trust, that's no
serves a useful purpose for longer and / or has little or no activity,
You can consider ending the trust altogether to avoid this
to submit a T3 return and the additional information provided above
ongoing annually.
While a trust is still a useful planning tool, these are cumbersome
Settlers and settlers may have reporting and disclosure obligations
Testators think twice before setting one up.
We know the government's intention to propose the new trust
The reporting requirements consisted in improving the collection of property rights
Information related to trusts and reducing the potential for
Taxpayers to aggressive tax avoidance and tax evasion
Activities with trusts. Miller Thomson's private client
The Services Group is still informed of the latest legislation
and will provide an update when laws are passed
adopt these requirements. In the meantime, if you have one
Trust the place and want to think about how this coverage is
Requirements can affect your confidence. Please contact a member of
Miller Thomson's Private Client Services Group.
Originally published by Miller Thomson February
2021
The content of this article is intended to provide a general overview
Guide to the subject. Expert advice should be obtained
about your particular circumstances.
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