With 2016 being a leap year there is an extra day in February which means there is further action required for those responsible for filing trust income tax and information returns.
The filing deadline for inter-vivos family trusts and other trusts with a December 31 year end is 90 days after the end of the year. For years other than leap years, returns filed on or before March 31 are considered filed on time. With the extra day in Februray 2016, the 2015 return filing deadline for inter-vivos family trusts and other trusts with a December 31 year end is March 30, 2016.
If a trustee does not file the trust’s T3 return by the due date, the Canada Revenue Agency (CRA) will charge a late‑filing penalty. The penalty is 5% of the unpaid tax plus plus 1% of the unpaid tax for each full month that the return is late, to a maximum of 12 months. The trust may still be subject to a penalty even if all income has been allocated and there are no taxes owing. The penalty is $25 a day for each day the return is late, from a minimum of $100 to a maximum of $2,500.
The late‑filing penalty will be higher if the trustee was issued a demand to file the return, and the CRA assessed a late‑filing penalty for any of the three previous years’ returns. In this case, the penalty may be 10% of the balance owing, plus 2% of the 2015 balance owing for each full month that the return is late, to a maximum of 20 months.
One day can make a significant difference – speak with a pro about filing deadlines.