KL World

March 2024

Before you read the following post, please see the March 28th post (above), which outline CRA's reversal regarding the following Trust filing requirements

Tax alert – new trust filing reporting requirements!

Why is this required?

Effective for trusts with a year-end of December 31, 2023 onwards, there are new reporting requirements as legislated by the Income Tax Act.

In an effort for Canada to fill existing information gaps on trusts and to comply with recommendations from the Financial Action Task Force (FATF) that aim to combat money laundering and terrorist financing activities, these new rules were put in place.

The due date for filing all trust returns affected by this new legislation is March 31, 2024.

Who does this affect?

In short, any person who holds or owns an asset in trust for someone else. This means being on legal title for that asset!

Consider the following scenarios:

1.   Mom and Son are on title for a home, but Mom is only on title in order for the bank to provide the Son the loan for the home.

Regardless of the ownership percentage, Mom is on title and holds the home in trust for the son. A trust return must be filed.

2.   Mom and Son are on title for a home, but Son is only on title for probate purposes.

A trust exists, as Son is holding the home in trust for Mom, who has the beneficial interest in the home. A trust return must be filed.

3.   Mom is a guarantor for Son’s mortgage on his home. She is not on title.

She is not holding the property in trust as she is not on title for the home. A trust return is not required.

4.   Parent or grandparent has set up an in-trust account for their minor child/grandchild .

They are holding the property in trust for the child until they reach a certain age. A trust return is required. (However, the income is still reported on the tax return of the contributing person)

Are you a lawyer or a real estate agent?

Please reach out to our tax team if you have more than a general account for your clients as you may have T3 filing requirements for each individual trust account you are holding on behalf of your clients.

What if you have multiple joint accounts?

You may have more than one trust filing depending on the circumstances. Please reach out to our tax team if you believe this situation applies to you.

Who does this NOT affect?

·        Two spouses co-owning a property is NOT a trust situation as neither spouse holds in the property in trust for the other spouse.

·        These rules also do not apply to registered plans like RESPs, RRSPs and TFSAs, nor does it apply to Graduated Rate Estates.

·        If the trust holds assets that do not exceed $50,000 in total fair market value throughout the year, and the only assets are cash, government bonds, public stocks and/or mutual funds, then no filing would be required.

·        New trusts in existence for less than 3 months (i.e., if the trust was created October 1st and later) are also exempted from filing for 2023.

*****NOTE: The beneficial owner / beneficiary does not have to file a trust return. It is the trust’s (via the trustees) responsibility to file this on behalf of the beneficiaries!

Why does this matter? What if I don’t file?

Penalties for non-compliance with these rules are STEEP… it ranges from $2,500 per trust to as high as 5% of the value of the trust property!!!!! It applies to the trustee(s) as the onus is on the trustee to file for the trust!

How can I prepare for this filing requirement?

-         Must obtain a Trust account number with CRA

-         Must determine who the settlor, beneficiaries, and trustees of the trust are, as well as provide detailed personal information for each (mailing address, SIN, DOB)

-         See details required for each trust in our attachment hereto.

Reach out to our tax team as soon as possible to determine next steps in the information gathering process relating to the new disclosure and filing requirements

To download a PDF copy of the information above, click here

December 2023

The Federal Budget 2023 introduced the Canadian Dental Care Plan (CDCP).  New legislation related to this plan will have an effect on what information you as an employer are required to report on your employees' T4's and T4A's issued for the 2023 tax year.  Click on the video below to learn from Sophie Jiwan, our Tax and Compliance Manager, what the implications are for your tax form reporting.

March 2023

In 2018, Adrian Cheung came on board with Kriens-LaRose for his first of several co-op placements with the firm.  Fast forward to 2023 and we are thrilled, not only to have continued our relationship with Adrian, but that we were able to bring him back as a full-time member of our team.  View the video below to learn about his experiences as a co-op student with KL, in a "fireside" chat with firm partner, Leanne LaRose.

January 2023

A change to your relationship status will sometimes require more than posting an update to your social media page.  This month Meghan Coyne, our Assurance Manager, will share her knowledge on marriage and other relationship changes, as they relate to CRA and your taxes.

It's important to note that every situation is different, so it's always wise to contact your tax professional to discuss your marital status and filing requirements.