It’s that time of the year when trustees and executors start thinking about tax returns including beneficiary tax information slips. So, are the beneficiaries obliged to hand over their tax IDs to the trustees and executors?
Our tax rules provide that the preparer of information slips should make a reasonable effort to obtain the tax ID information from the individuals or businesses for which they are preparing information slips, such as T3 slips. Individuals or businesses failing to provide their tax ID to a person required to make an information return may be subject to a penalty of $100 for each failure.
In a recent technical interpretation the Canada Revenue Agency was asked if the Agency is obligated to disclose the tax ID of a business or individual to a third party slip preparer. In their response the Canada Revenue Agency said that the Agency would disclose tax ID information to the public if the request is in connection with a program, activity or service undertaken by the Minister. In the Agency’s opinion, the preparation of information slips is not a program, activity or service undertaken by the Minister.
Trustees and executors are advised to document their efforts to obtain tax ID information as a way to reduce tax penalties to the trust or estate.