Previously published in The Fund Library on
November 28, 2018.
Proposed changes in the March 2018 federal budget included new
reporting requirements for trusts. The new measures relate to
filing T3 returns and disclosure that will be required on trustees,
beneficiaries, and settlors starting in 2021. Here's a look at
the impact of the new rules.
Trusts are not technically legal entities. Rather, it's the
trustees, acting on behalf of the trust, who have legal capacity.
In fact, when I draft documents to which a trust is a party, the
contracting person is actually the trustee of the trust, and not
the trust itself. Yet, under the Tax Act in
Canada, a trust is a separate taxable entity, which means that it
is a taxpayer in its own right and has to report any income and pay
taxes on that income (to the extent it has not allocated any income
out in the same taxation year to a beneficiary). This means a trust
has to also file a tax return.
