Trusts (including bare trusts) should prepare to meet significant new annual information reporting requirements that are set to apply to taxation years ending after December 30, 2023. Under these requirements, which will require more trusts to file a “T3 Trust Income Tax and Information Return” by April 2, 2024, affected trusts will now have to report specific information on each trustee, beneficiary, settlor and controlling person (e.g., a protector) of the trust in their 2023 T3 return, subject to limited exceptions. Trusts that do not meet these new requirements may be subject to significant penalties.
With the first reporting deadline under the new rules fast approaching, there is only a limited time to meet these new requirements. As a result, it's important for taxpayers to consider these changes and identify all their affected trust arrangements (including bare trusts) so they can start to collect the information to meet these new rules. Note that affected trusts that were wound-up in 2023 will still have to gather and report required trust information in a T3 return for its final year (as the end of its taxation year will still be December 31, 2023).
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