Trust Reporting Rule – A New (And Unnecessary) Compliance Burden For Registered Charities?

As part of seeking to prevent inappropriate tax avoidance using trusts, the Federal Department of Finance recently introduced new trust reporting rules that will apply beginning at the end of 2023. These rules are designed to increase transparency by requiring trusts to report on their settlors, beneficiaries and trustees and to file T3 information returns beginning in the spring of 2024. There are significant financial penalties for not complying with the new obligations.

A concern has developed in the charitable sector that these rules will apply to trusts held within registered charities. While the new rules explicitly exempt trusts that are registered charities, they are silent on trusts that are held within registered charities. It is quite common for charities to receive gifts that require the gift capital to be held in trust and used to produce income for some element of the recipient charity's purposes. On a plain reading of the new trust reporting