Changes to your personal information?  Please download the 'Client Info' sheet, complete and submit to us with your tax forms.

The Tax Season Checklist is here to give you a list of items you should include if they apply to your personal situation.

The change in reporting requirements means that affected trusts will be required to file a T3 Trust income tax and information return (T3 return) and a Schedule 15 (Beneficial Ownership Information of a Trust) with the Canada Revenue Agency (CRA) every year.

Many trusts will be filing a T3 return for the first time. Before the introduction of the new reporting requirements, a trust that did not earn income, dispose of capital property, or make distributions of income or capital in a year was generally not required to file an annual return.

IT IS THE TRUSTEE'S RESPONSIBILITY TO FILE

https://www.canada.ca/en/revenue-agency/services/tax/trust-administrators/t3-return/new-trust-reporting-requirements-t3-filed-tax-years-ending-december-2023.html

The term "bare trust" is not defined in the Income Tax Act. However, a bare trust for income tax purposes is a trust arrangement under which the trustee can reasonably be considered to act as agent for all the beneficiaries under the trust with respect to all dealings with all of the trust's property.

A trustee can reasonably be considered to act as agent for a beneficiary when the trustee has no significant powers or responsibilities, the trustee can take no action without instructions from that beneficiary and the trustee’s only function is to hold legal title to the property. In order for the trustee to be considered as the agent for all the beneficiaries of a trust, it would generally be necessary for the trust to consult and take instructions from each and every beneficiary with respect to all dealings with all of the trust property.

A common example of a situation where a bare trust arrangement can exist is when, for estate planning purposes you have added your children to the title of the property.  Your child would be the Trustee, managing the property according to your wishes as the beneficial owner (the beneficiary).

Another example might be a bank or investment account where the money is held in trust for another person.  You might have added your children to your bank account to assist you.  The money in the account belongs to you as the beneficial owner (the beneficiary), however your adult child acts in the capacity of a trustee and manages it for you according to your instructions.  Generally, the amount of the account has to be over $50K to create a filing requirement.

If this situation applies to you, please call as as soon as possible.  The filing deadline for trusts is 90 days after the December 31 year end.  We will need

•  the circumstances describing the trust situation....
•  reportable entities:   the trust’s settlors, trustees, beneficiaries as well as any person who has the ability to exert control or override trustee decisions (such as a protector).  (see the link below)  
• description of the property (property tax bill)
• description of the bank or investment account (bank or investment statement)

Exceptions (trusts that do not have to file)

• trusts that have existed for less than three months at the end of the year;
• trusts that hold less than $50,000 CAD in assets throughout the tax year (as long as they only hold specific types  of assets such as deposits, government debt obligations and listed  securities. If it holds gold or silver for example then they are not exempt);
• mutual fund trusts, segregated funds and master trusts;
• trusts where all the units of which are  listed on a designated stock exchange;
• trusts governed by registered plans,  including the proposed first home savings accounts;
• employer profit sharing plans;
• lawyers’ general trust accounts;
• graduated rate estates and qualified disability trusts;
• trusts that qualify as non-profit organizations or registered charities;
• employee life and health trusts;
• certain government-funded trusts; and,
• cemetery care trusts and trusts governed by eligible funeral arrangements.

Home office expenses for working at home  – You may be eligible to deduct home office expenses (work-space-in-the-home expenses, office supplies, and certain phone expenses) if you work from home 50% or more . For more information about how to claim home office expenses, read Employees working at home in Guide T4044, Employment Expenses. https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/t4044.html

Internet access fees – Starting in 2020, employees who work from home can include reasonable monthly home internet access fees as part of their work-space-in-the-home expenses.

Meal rate – Since January 1, 2020, the meal rate for each meal has increased from $17 to $23 (includes sales tax) to a maximum of $69 / day. For more information, read Transportation employees in Guide T4044, Employment Expenses.