Enhanced Trust Reporting Now Applies for 2023 and Later Tax Years

Trust reporting has changed.

Due to changes in legislation, trusts are required to provide enhanced reporting starting in the 2023 tax year. The enhanced reporting requires more detailed personal information to be provided on the beneficiaries, trustees, and settlor of the trust.

What Enhanced Reporting is required?

The following needs to be provided for each trustee, beneficiary, settlor of the trust, and anyone who can exert influence over trustee decisions (e.g. a protector of the trust):

  • name
  • address
  • date of birth (for individuals)
  • jurisdiction of residence
  • taxpayer identification number

Information also needs to be disclosed regarding any unnamed beneficiaries (e.g. unborn children and grandchildren).

Are there any exceptions to the enhanced reporting?

The most common exceptions to the enhanced trust reporting are:

  • trusts that hold less than $50,000 in assets throughout the taxation year (provided that their holdings are confined to deposits, government debt obligations and listed securities)
  • trusts that have been in existence for less than three months
  • graduated rate estates and qualified disability trusts
  • trusts that qualify as non-profit organizations or registered charities
  • lawyers’ general trust accounts

The exceptions listed above are to the enhanced reporting (Schedule 15) and do not mean that a T3 trust tax return is not required.

Are there penalties for failing to provide the enhanced disclosure?

Yes, a penalty equal to the greater of:

  • $2,500
  • 5% of the highest total fair market value of all property held by the trust in the year

Accordingly the penalty can be very significant where the trust return and enhanced reporting are not filed by the due date. The due-date for December 31, 2023 year-end is March 30, 2024 (due to the leap-year).

For additional information, please view Canada Revenue Agency guidance.

Disclaimer: This article is intended to inform readers in general terms. It is not intended to provide any tax or business advice. Please consult your Stern Cohen advisor if you have any questions about your unique situation. While we have tried to ensure the accuracy of the information in this article, we accept no liability for errors or omissions.