With a new year is upon us it is important to keep in mind the various filing deadlines for trusts and estates (a trust).
Generally, a trust has to file an annual income tax and information return (T3) if the trust earns income or makes annual distributions. The T3 along with any balance owing and the beneficiary trust information slips are due no later than 90 days after the year-end. There are penalties for filing the T3 after the due date of the tax return – 5% of the unpaid tax plus 1% of the unpaid tax for each full month the return is late. In addition, the penalty for filing an information slip or slips after the due date is $100, up to a maximum of $7,500.
A trust may be required to file certain foreign reporting information including T1134 (Information Return Relating to Controlled and Not-Controlled Foreign Affiliates – due 15 months after the trust’s tax year-end) and T1135 (Foreign Income Verification Statement – due with the T3). In the event either of these returns is late-filed there is a penalty of $25 per day up to a maximum of $2,500.
The Canada Revenue Agency recently updated the filing requirements for trusts that will extend the annual filing requirements to certain inactive trusts starting in 2021.