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Code number for the type of trust

A trust is either a testamentary trust or an inter vivos trust.

Enter the code number for the type of trust.

Testamentary trusts:

• code 900, for a testamentary trust that is not identified by one of the other testamentary trust codes

• code 901, for a Lifetime Benefit trust

• code 903, for an estate that designated itself as a graduated rate estate (applicable for tax years ending after 2015)

• code 904, for a Qualified Disability trust (applicable for tax years ending after 2015 when Form T3QDT, Joint Election for a Trust to be a Qualified Disability Trust is submitted)

• code 905, for a Spousal or Common-Law partner trust

Inter vivos trusts:

• code 300, Other trust

• code 301, for a Registered Retirement Savings Plan (RRSP) trust liable for tax under Part I

• code 302, for a Registered Retirement Income Fund (RRIF) trust liable for tax under Part I

• code 303, for a Registered Disability Savings Plan (RDSP) trust liable for tax under Part I

• code 304, for a Real Estate Investment trust (REIT)

• code 306, for a Salary Deferral Arrangement (SDA)

• code 307, for a Bare Trust

• code 311, for a Land Settlement Trust

• code 314, for an Environment Quality Act trust described in paragraph 149(1)(z.1)

• code 315, for a Nuclear Fuel Waste Act trust described in paragraph 149(1)(z.2)

• code 316, for an Hepatitis C trust described in paragraph 81(1)(g.3)

• code 317, for an Indian Residential Schools trust described in paragraph 81(1)(g.3)

• code 318, for a former tax-free savings account (TFSA) trust after the end of the exempt period

• code 319, for a Registered Education Savings Plans (RESP) trust liable under Part I

• code 320, for a TFSA trust liable for tax under Part I

• code 321, for an Employee Life and Health trust (ELHT)

• code 322, for a Spousal or Common-Law Partner trust. If the spouse or common-law partner died in the year, see the Note at the end of this listing

• code 323, for a Unit trust

• code 324, for a Mutual Fund trust

• code 325, for a Communal Organization trust

• code 326, for an Employee Benefit Plans trust

• code 327, for an Insurance Segregated Fund-Fully registered trust

• code 328, for an Insurance Segregated Fund-Partially registered trust

• code 329, for an Insurance Segregated Fund-non-registered

• code 330, for a Non-profit Organization-Subsection 149(5) trust

• code 331, for a Non-profit Organization trust-subsection 149(1)(l)

• code 332, for an Employee trust

• code 333, for a Blind/Revocable trust

• code 334, for a Personal trust

• code 335, for a Joint Spousal or Common-Law Partner trust. If the last surviving beneficiary (either the settlor, or the spouse or common law partner, as the case may be) died in the year; see the Note at the end of this listing.

• code 336, for an Alter Ego trust. If the settlor died in the year, see the Note at the end of this listing.

• code 337, for a Master trust

• code 338, for a Specified Investment Flow-Through (SIFT) trust

• code 340, Safe Drinking Water trust

• code 342, First Home Savings Account (FHSA)

• code 519, for a Pooled Registered Pension Plans (PRPP)

  Note

  If the trust was a trust identified as code 322, 335, or 336 and the trust is continued after the death of the last surviving lifetime beneficiary (either the settlor, or the spouse or common-law partner, as the case may be), use trust type code 300 (other trust) on all T3 returns filed for a tax year ending after the date of death.

Who should file ▲

The rules have changed in respect of the situations for which a T3 return must be filed, effective for trust tax years ending on or after December 31, 2023. Refer to the applicable section below that corresponds to the tax year of the trust to determine whether the trust must file a T3 return.

Rules for tax years ending on or after December 31, 2023

For tax years ending on or after December 31, 2023, additional rules apply in respect of the requirement to file a T3 return. A T3 return must be filed if either A or B applies.

A. The trust is an express trust (or for civil law purposes a trust other than a trust that is established by law or by judgement) which is resident in Canada and it is not a listed trust.

Note: This determination must also be applied to a trust deemed resident in Canada under subsection 94(3).

B. Income from the trust property is subject to tax, and:

• the trust is an express trust (or for civil law purposes a trust other than a trust that is established by law or by judgement) resident in Canada and is a listed trust, or

• the trust is not an express trust (or for civil law purposes a trust other than a trust that is established by law or by judgement) resident in Canada.

  Note: The above two bullets represent all other trusts (resident and non-resident) not described in A above.

and in the year, the trust:

• has tax payable

• is requested to file

• is resident in Canada and has either disposed of, or is deemed to have disposed of, a capital property or has a taxable capital gain (for example, a principal residence, or shares)

• is a non-resident throughout the year, and has a taxable capital gain (other than from an excluded disposition described in subsection 150(5)) or has disposed of taxable Canadian property (other than in an excluded disposition)

• is a deemed resident trust

• holds property that is subject to subsection 75(2) of the Act

• has provided a benefit of more than $100 to a beneficiary for upkeep, maintenance, or taxes for property maintained for the beneficiary's use (for more information, see "Line 22 - Upkeep, maintenance, and taxes of a property used or occupied by a beneficiary" on page 34), or

• receives from the trust property any income, gain, or profit that is allocated to one or more beneficiaries, and the trust has:

  • total income from all sources of more than $500

  • income of more than $100 allocated to any single beneficiary

  • made a distribution of capital to one or more beneficiaries, or

  • allocated any portion of the income to a non-resident beneficiary

  Note
  

  For purposes of the requirement to file a T3 return, a trust includes an arrangement under which the trust 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. These arrangements are generally known as "bare trusts". See the definition of bare trust in "Chart 1 - Types of Trusts" on page 15 and What to file - Instructions for bare trusts on page 29.

Where a trust is required to file for the first time, it will need to have a trust account number before being able to file a T3 return electronically. For more information on how to obtain a T3 account number, see "Trust account number" on page 19.

Listed Trusts

The following are listed trusts:

• a trust that has been in existence for less than three months at the end of the year

• a trust that only holds certain types of assets (described on page 28) with a fair market value that does not exceed $50,000 throughout the taxation year (a trust that is required under the relevant rules of professional conduct or the laws of Canada or a province to hold funds for the purposes of the activity that is regulated under those rules or laws, provided it is not maintained as a separate trust for a particular client or clients (this provides an exception for a lawyer's general trust account, but not for specific client accounts)

• a trust that qualifies as a non-profit organization described in paragraph 149(1)(l) of the Act or a registered charity

• a mutual fund trust

• a related segregated fund trust, as defined in paragraph 138.1(1)(a) of the Act

• a trust, all the units of which are listed on a designated stock exchange

• a prescribed master trust

• a graduated rate estate

• a qualified disability trust

• an employee life and health trust

• a trust described under paragraph 81(1)(g.3) of the Act

• a trust under or governed by:

  • a deferred profit sharing plan

  • a pooled registered pension plan

  • a registered disability savings plan

  • a registered education savings plan

  • a registered pension plan

  • a registered retirement income fund

  • a registered retirement savings plan

  • a tax-free savings account

  • an employee profit sharing plan

  • a registered supplementary unemployment benefit plan

  • a first home savings account

• a cemetery care trust, or a trust governed by an eligible funeral arrangement

When must beneficial ownership information be submitted

A trust (other than a listed trust) that is required to file a T3 return, generally must report beneficial ownership information on Schedule 15. This reporting requirement also applies in respect of a trust that is a bare trust.

For more information about Schedule 15, see "Schedule 15 - Beneficial Ownership Information of a Trust" on page 68.

The new trust reporting requirements do not require the disclosure of information that is subject to solicitor-client privilege.

Although a listed trust may not be required to complete a Schedule 15, the trust may still be required to file a T3 return.

Rules for tax years ending before December 31, 2023.

You have to file a T3 return if income from the trust property is subject to tax, and in the tax year, the trust:

• has tax payable

• is requested to file

• is resident in Canada and has either disposed of, or is deemed to have disposed of, a capital property or has a taxable capital gain (for example, a principal residence, or shares)

• is a non-resident throughout the year, and has a taxable capital gain (other than from an excluded disposition described in subsection 150(5)) or has disposed of taxable Canadian property (other than from an excluded disposition)

• is a deemed resident trust

• holds property that is subject to subsection 75(2) of the Act

• has provided a benefit of more than $100 to a beneficiary for upkeep, maintenance, or taxes for property maintained for the beneficiary's use (for more information, see "Line 22 - Upkeep, maintenance, and taxes of a property used or occupied by a beneficiary" on page 34), or

• receives from the trust property any income, gain, or profit that is allocated to one or more beneficiaries, and the trust has:

  • total income from all sources of more than $500

  • income of more than $100 allocated to any single beneficiary

  • made a distribution of capital to one or more beneficiaries, or

  • allocated any portion of the income to a non-resident beneficiary

Examples

A T3 return must be filed when a trust does not have tax payable, however the trust holds property that is subject to subsection 75(2) and from which the trust received income, gains or profits during the year.

A T3 return must be filed when the trusts' total income from all sources is less than $500, however the trust made a distribution of capital to one or more beneficiaries.

Rental income or timber royalty from Canada

Rental income from real property in Canada or a timber royalty on a Canadian timber resource property is subject to a 25% withholding on the gross income under Part XIII, unless the rate is reduced by a reciprocal tax treaty.

A non-resident may file a separate T3 Return pursuant to an election under section 216 in respect of its net rental or timber royalty income.

Indicate "Section 216" on the top of the first page of the T3 Return. For more information, see IT393R2 - Election Re: Tax on Rents and Timber Royalties Non-Residents.

Trust account number

A trust account number is an alphanumeric identifier starting with the letter "T" and followed by an eight digit number. You must provide this identifier on every T3 return, trust-related information slip, and any correspondence related to the trust. See "Failure to provide the trust account number" below.

In order to file a T3 return electronically, a Trust account number needs to be requested prior to filing the return.

This application also applies to a non-resident trust electing to file an income tax return under section 216 of the Income Tax Act. For more information please see the T4144: Income Tax Guide for Electing Under Section 216

If the residency status of a trust changes, after having been assigned a trust account number, the trust will continue to use the same trust account number. If a trust, to which section 94 applies, is an electing trust with filing obligations under both its resident portion trust and its non-resident portion trust, these returns must be filed separately using two distinct trust account numbers.

Applying for a trust account number

A trustee can apply for a trust account number using the CRA's online trust account registration service, or Form T3APP, Application for Trust Account Number.

For information about authorizing a representative for the trust, see "Giving or cancelling an authorization" on page 81.

What you need before you apply

You need to know your trust name, trustee contact information, trust creation date, and trust type. If you are unsure of the trust's name, see the section Name of trust under What to file - Instructions for bare trusts (page 29).

You will also need supporting documentation, such as a signed copy of the trust document or the last will and testament. In some situations, there may not be a written trust document or it may not be clear what constitutes a trust agreement.

Examples of documents establishing a trust relationship include, but are not limited to, the following:

• Trust agreement, deed, or settlement

• Trust declaration

• Last will and testament (in the case of a testate estate)

• Notarial will (Province of Québec)

• Certificate of appointment of estate trustee with the last will and testament attached for a testate estate

• Certificate of appointment of estate administrator for an intestate estate

• Bare trust agreement

• Documentation evidencing institutions and arrangements governed by the laws of the Province of Québec that are deemed to be trusts under subsection 248(3) of the Income Tax Act

• Other documentation evidencing the establishment and terms of the trust

As many different arrangements can be trusts, if there are no written documents for the trust, please submit a written summary (typewritten or legibly printed) of the nature of the trust arrangement, including the title "Summary of [enter trust name]".

The written summary should include the date of creation of the trust and the full names of the trustees, settlor, and beneficiaries.

Online trust account registration service

You can access the Trust account registration service in these portals:

• My Account, under "More Services" in the menu on the left-hand side

• My Business Account, under "More Services" in the menu on the left-hand side

• Represent a Client, in the menu on the left-hand side

The trust's supporting documentation can be uploaded electronically at the time of registration, using the Submit trust documentation button on the last page of the registration process.

Using Form T3APP, Application for Trust Account Number

Fill out and sign Form T3APP and send it to us with a copy of the trust's supporting documentation at the applicable address listed on page 3 of Form T3APP.

Receiving your trust account number

If you use the Trust Account Registration service, you will receive the trust account number immediately after you complete the online registration process. Ensure to send us a copy of the trust document or signed last will and testament.

Offline access to a trust account

A trustee or an authorized representative can obtain information and request certain changes by mail or by phone using the contact information for their tax centre listed on page 23 of this guide.

Online access to My Trust Account

My Trust Account can be accessed through Represent a Client. To gain access to My Trust Account, primary trustees must have access to Represent a Client with a representative identifier (RepID). Once the trust account number has been issued, the trustee needs to register as Primary Trustee through the Authorization request option of Represent a Client. If you do not have access to Represent a Client, you can register online. For more information, go to canada.ca/cra-registration.

Failure to provide the trust account number

After the CRA assigns the trust account number, you must use it when filing the trust's T3 return. Each failure to do so will result in a $100 penalty.

What to file ?

Trusts listed in "Chart 1 - Types of Trusts" beginning on page 10 may have to file a T3 return, and any related schedules and statements, if they meet the requirements listed in "Who should file" on page 18.

The T3 return is filed as both an income tax return, which calculates tax liability, and an information return, which reports amounts allocated and designated to beneficiaries.

When the trust files its first T3 return, send us a copy of the trust document or signed last will and testament, if not already provided.

You may also have to file the following, depending on the type of amounts paid or allocated by the trust:

• If the trust allocated amounts to resident beneficiaries, file the T3 Summary, Summary of Trust Income Allocations and Designations and the related T3 slips. For more information, see "Chapter 4 - T3 slip and T3 Summary" on page 69.

• If the trust paid executor, liquidator, or trustee fees, or if an employee benefit plan or an employee trust made distributions other than a return of employee contributions, file a T4 Summary, Summary of Remuneration Paid, and the related T4 slips, Statement of Remuneration Paid. For more information, see Guide RC4120, Employers' Guide - Filing the T4 Slip and Summary.

• If the trust paid scholarships, fellowships, bursaries, prizes, or research grants to a resident of Canada, file a T4A Summary, Summary of Pension, Retirement Annuity, and Other Income, and the related T4A slips, Statement of Pension, Retirement, Annuity, and Other Income. For more information, see Guide RC4157, Deducting Income Tax on Pension and Other Income, and Filing the T4A Slip and Summary.

• If the trust paid or credited, or is considered to have paid or credited, amounts to a non-resident beneficiary, file an NR4 Summary, Summary of Amounts Paid or Credited to Non-Residents of Canada, and the related NR4 slips, Statement of Amounts Paid or Credited to Non-Residents of Canada. For more information, see Guide T4061, NR4 - Non-Resident Tax Withholding, Remitting, and Reporting.

• If the trust paid fees to a non-resident of Canada for services performed in Canada and the non-resident acts in the capacity of an executor in the course of a business, file a T4A-NR Summary, Fees, Commissions, or Other Amounts Paid to Non-Residents for Services Rendered in Canada, and the related T4A-NR slips, Statement of Fees, Commissions, or Other Amounts Paid to Non-Residents for Services Rendered in Canada. For more information, see Guide RC4445, T4A-NR - Payments to Non-Residents for Services Provided in Canada.

• A trust (including a bare trust) that is required to file a T3 return, other than a listed trust generally must report beneficial ownership information on Schedule 15. For more information about Schedule 15, see "Schedule 15 - Beneficial Ownership Information of a Trust" on page 68.

Form T3-DD, Direct Deposit Request for T3

We can deposit a trust's T3 refund into the trust's account at a financial institution in Canada.

To enrol for direct deposit or to update a trust's banking information, the trustee or other authorized person can complete Form T3-DD, Direct Deposit Request for T3, and send it to the CRA. For more information, go to canada.ca/cra-direct-deposit.

When to file ▲

The filing due date depends on the trust's tax year-end.

Tax year-end and fiscal period

Graduated Rate Estate

A graduated rate estate (GRE) can have a non-calendar tax year (the period for which the accounts of the estate are made up for purposes of assessment). A GRE will have a deemed tax year-end on the day on which the estate ceases to be a GRE, which will be no later than the day on which the 36-month period after the death of the individual ends.

Later tax year-ends will generally be on a calendar year basis. For example, where an estate is created in June 2020, and is a GRE for 2020, 2021 and 2022, a deemed year-end will occur in June 2023 on the 3-year anniversary of the individual's date of death. The testamentary trust will also have a tax year-end on December 31, 2023.

All other trusts

All other trusts are generally required to use a December 31 tax year-end. However, an exception is available for mutual fund trusts that elect to have a December 15 year-end. A mutual fund trust that previously elected to have a December 15 year-end can revoke the election. For more information, call 1-800-959-8281.

Deemed year-end rules for all trusts

There are other situations in which a trust would be subject to a deemed year-end that may affect its tax year- end. For example, if a trust ceased to be resident in Canada on June 14, 2023, a deemed year-end would be triggered and the trust would be considered to have a tax year from January 1 to June 14, 2023. For more information, call 1-800-959-8281.

Filing dates

In the same calendar year, you have to file the T3 return, the related T3 slips, NR4 slips, and T3 and NR4 Summaries no later than 90 days after the trust's tax year-end (see "Tax year-end and fiscal period" on page 21). You should also pay any balance owing no later than 90 days after the trust's tax year-end.

If you do not have the information slips you need to complete the return when it is due, estimate the income. If, after you receive the slips, you find your estimate differs from the actual amounts, send the slips and a letter to us, requesting an adjustment to the trust's income. For more information, see "Reassessments" on page 25.

Received dates

If you mail the return first class, or if you use an equivalent delivery service, we consider the date of the postmark on the envelope to be the day you filed the return.

When the due date falls on a Saturday, Sunday, or public holiday recognized by the CRA:

• Your return is considered on time if the CRA receives it, or it is postmarked on or before the next business day.

• Your payment is considered on time if the CRA receives it on, or it is processed at a Canadian financial institution on or before the next business day.

For more information, go to canada.ca/when-file-t3-return.

For information on penalties on late-filed returns, and interest on unpaid taxes, see "Penalties and interest" on page 23.

Deadline for distributing T3 slips - You must send the T3 slips to the beneficiary's last known address no later than 90 days after the end of the trust's tax year. If you have the information you need to complete the slips before that deadline, we encourage you to send them to the beneficiaries as early as possible.

Final T3 return

For a testamentary trust that is a graduated rate estate, you have to file the final T3 return and pay any balance owing no later than 90 days after the trust's wind-up (discontinuation) date. Enter the wind-up date on page 2 of the return.

If you wind up a graduated rate estate, the tax year will end on the date of the final distribution of the assets.

If you wind up an inter vivos trust or a testamentary trust (other than a graduated rate estate), you have to file the final T3 return and pay any balance owing no later than 90 days after the trust's tax year-end.

In either case, you should get a clearance certificate before you distribute the trust property. For more information, see "Clearance certificate" on page 26.

How to file the T3 return ╘

Filing through EFILE

You have the option to file this return through EFILE. For more information about this filing method, go to canada.ca/efile.

T3 EFILE Exclusions

You cannot file a Trust return electronically in any of the following situations, any related schedules, and forms listed below:

• The return is an amended T3 trust return.

• The return is for a tax year that ends before 2021.

• The trust does not have a trust account number.

• The trust is filing Form RC199, Voluntary Disclosures Program (VDP) Taxpayer Agreement, or the taxpayer is making a request under the Voluntary Disclosures Program.

• Form T1273, Statement A - Harmonized AgriStability and AgriInvest Programs Information and Statement of Farming Activities for Individuals and Form T1163, Statement A - AgriStability and AgriInvest Programs Information and Statement of Farming Activities for Individuals are excluded from T3 EFILE.

• T3 NB-SBI, T3 New Brunswick Small Business Investor Tax Credit.

• T3SK CG, Saskatchewan Farm and Small Business Capital Gains Tax Credit (Trusts).

• T3PFT, T3 Provincial or Territorial Foreign Tax Credit for Trusts.

• Business income tax paid to more than 3 foreign countries on Form T3FFT, T3 Federal Foreign Tax Credits for Trusts.

• Non-business income tax paid to more than 3 foreign countries on Form T3FFT, T3 Federal Foreign Tax Credits for Trusts.

• More than 12 Selected Financial Data (SFD) records.

• A claim for Return of fuel charge proceeds to farmers tax credit for a 2021 tax year.

• A claim for Yukon business carbon price rebate for a 2021 tax year.

• Trusts claiming bankruptcy in the year

• Trusts filing Form T2223, election, under subsection 159(6.1) of the income tax act, by a trust to defer payment of income tax

Filing of T3 Summary and Slips

Beginning January 1, 2024, if you file more than five T3 slips for a calendar year you must file them electronically to avoid penalties. See page 69 for information on filing the T3 Summary and T3 slips electronically using Internet file transfer or Web forms.

As of January 1, 2024, if you file more than five T3 Slips for a calendar year and you do not file the T3 Slips electronically, see Failure to file electronically on page 23 For the latest information about the penalty for not filing information returns over the Internet, go to canada.ca/mandatory-electronic-filing. You can also subscribe to our email distribution list about the electronic filing of information returns at canada.ca/cra-email-lists.

Filing on paper

Where you file the T3 return depends on whether the trust is resident in Canada, or is a non-resident trust or deemed resident trust. If the trust is resident in Canada, where you file the T3 return depends on the trustee's address.

We consider a trust to reside where its real business is carried on, which is where the central management and control of the trust actually takes place. Usually, the management and control of the trust rests with, and is exercised by, the trustee, executor, liquidator, administrator, heir or other legal representative of the trust. The residence of the trustee (or other representative of the trust) does not always determine the residence of a trust. See also "Residence of trust" on page 27.

If the trust resides in:

New Brunswick, Nova Scotia, Prince Edward Island, Newfoundland and Labrador, or the remainder of the provinces of Ontario and Quebec not listed under the Winnipeg Tax Centre.

Send the T3 return to:

If you have questions about resident trusts, call 1-800-959-8281.

If the trust resides in:

Manitoba, Saskatchewan, Alberta, British Columbia, Northwest Territories, Yukon, Nunavut, Hamilton (Ontario) and surrounding area, Kitchener-Waterloo (Ontario) and surrounding area, Laval (Quebec) and surrounding area, Montreal (Quebec) and surrounding area, and Sherbrooke (Quebec) and surrounding area,

Send the T3 return to:

If you have questions about resident trusts, call 1-800-959-8281.

Non-resident trusts and deemed resident trusts

Send the T3 return to:

If you have questions about non-resident trusts or deemed resident trusts, call one of the following numbers:

• Toll free within Canada and the continental USA: 1-800-959-8281.

• If you are outside Canada and the United States, call 613- 940-8495. The CRA only accepts collect calls made through a telephone operator. After your call is accepted by an automated response, you may hear a beep and notice a normal connection delay. This service operates in Eastern Standard Time and is open Monday to Friday from 8:00 am to 8:00 pm and Saturday from 9:00 am to 5:00 pm.

Penalties and interest ▲

Penalties

Failure to file a T3 return

If you do not file the T3 return by the due date, we will charge a late filing penalty. The penalty is 5% of the unpaid tax when the return was required to be filed plus 1% of such unpaid tax for each full month that the T3 return is late, to a maximum of 12 months.

The late filing penalty will be higher if we issued a demand to file the T3 return, and we assessed a late filing penalty in respect of a T3 return for any of the three preceding tax years. In this case, the penalty may be 10% of the unpaid tax when the return was required to be filed, plus 2% of such unpaid tax for each full month that the return is late, to a maximum of 20 months.

The trust will be subject to an alternative penalty if it has no unpaid taxes on the date it is required to be filed. This alternative late-filing penalty is $25 a day for each day the return is late, from a minimum of $100 to a maximum of $2,500.

If the trust is not a listed trust, an additional penalty may apply if you knowingly, or under circumstances amounting to gross negligence, failed to file a return. See "False statements or omissions - If the trust is not a Listed Trust" below.

Repeated failure to report income

If you failed to report an amount of income on your T3 return for 2023 and you also failed to report an amount of income on your T3 return for 2020, 2021, or 2022, you may have to pay a federal and provincial or territorial repeated failure to report income penalty. We will consider that there is a failure to report income if you did not report an amount of income equal to or greater than $500 for a tax year and where such failure is not made knowingly or under circumstances amounting to gross negligence.

The federal and provincial or territorial penalties are each equal to the lesser of:

• 10% of the amount you failed to report on your T3 return for 2023

• 50% of the difference between the understated tax (and/or overstated credits) related to the amount you failed to report and the amount of tax withheld related to the amount you failed to report

However, if you voluntarily tell us about an amount you failed to report, we may waive these penalties. For more information, go to canada.ca/taxes-voluntary-disclosures.

False statements or omissions

If the trust is not a Listed Trust

For a tax year ending on or after December 31, 2023 a penalty may apply if the trust is not a listed trust and a person or partnership knowingly or under circumstances amounting to gross negligence either:

• made, participated in, assented to or acquiesced in the making of a false statement or an omission on the trust's T3 return.

• failed to file a T3 return, or

• failed to comply if CRA issued a demand to file the trust's T3 return

The penalty is equal to the greater of:

• $2,500

• 5% of the highest amount at any time in the year that is equal to the total fair market value of all the property held by the trust at that time

In addition, you may be assessed a further penalty in respect of a false statement or an omission, equal to the greater of:

• $100

• 50% of the understated tax and/or the overstated credits related to the false statement or omission

If the trust is a Listed Trust

You may have to pay a penalty if you knowingly or under circumstances amounting to gross negligence have made a false statement or an omission on the T3 return.

The penalty is equal to the greater of:

• $100

• 50% of the amount of any understated tax and overstated credits related to the false statement or omission.

If you fail to provide any information on your T3 return, you may also have to pay a penalty of $100 in respect of that failure.

The trustee or tax preparer will also be subject to penalties if, due to culpable conduct, they prepare, or participate in the preparation of, income tax or information returns, forms, or certificates on behalf of another person and make false statements.

Failure to distribute/file trust-related information slip as required

• If you distribute any trust-related information slip to a recipient late, the penalty is $25 a day for each day the slip is late, from a minimum of $100 to a maximum of $2,500, for each failure to comply with this requirement.

• The minimum penalty for failing to file a trust-related information slip by the due date is $100 and the maximum penalty is $7,500.

If you are convicted of not filing a T3 return or T3 slip as and when required, you are liable to a fine of $1,000 to $25,000, or to a fine and imprisonment for a period of up to 12 months.

Failure to file electronically

Starting January 1, 2024, if you file more than 5 information returns of a same type for a calendar year, you must file the information returns electronically. After filing the original information return, slips can be amended, added, or deleted in paper or electronic format. For more information, see section "Choose the filing method to amend, add, replace or cancel T3 slips" on page 69.

If you do not file electronically when you are required to do so, the penalty the CRA assesses is based on the number of information returns filed in an incorrect format. Each slip is an information return.

The penalty is calculated per type of information return. For example, if you file 6 NR4 slips and 6 T3 slips on paper, the CRA would assess two penalties of $125, one per type of information return.

For the latest information about the penalty for not filing information returns over the Internet, go to canada.ca/mandatory-electronic-filing .

You can also subscribe to our email distribution list about the electronic filing of information returns at canada.ca/cra-email-lists.

Interest

We pay compounded daily interest, at a prescribed rate, on a tax refund starting on the latest of:

• the 30^th day after the balance is due for the tax year

• the 30^th day after the return for the tax year was filed

• the day the overpayment arises

We charge interest on unpaid amounts and the total amount of penalties assessed. We calculate this interest, compounded daily, at a prescribed rate starting on the day after the unpaid amount was due until the date of its payment.

Cancel or waive penalties or interest

The CRA administers legislation, commonly called taxpayer relief provisions, that allows the CRA discretion to cancel or waive penalties and interest when taxpayers cannot meet their tax obligations due to circumstances beyond their control.

The CRA's discretion to grant relief is limited to any period that ends within 10 calendar years before the year in which a relief request is made.

For penalties, the CRA will consider your request only if it relates to a tax year or fiscal period ending in any of the 10 calendar years before the year in which you make your request. For example, your request made in 2023 must relate to a penalty for a tax year or fiscal period ending in 2013 or later.

For interest on a balance owing for any tax year or fiscal period, the CRA will consider only the amounts that accrued during the 10 calendar years before the year in which you make your request. For example, your request made in 2023 must relate to interest that accrued in 2013 or later.

Taxpayer relief requests can be made online using the CRA's My Account, My Business Account (MyBA), or Represent a Client digital services:

• My Account: After signing in, select "Accounts and payments," then "Request relief of penalties and interest."

• MyBA or Represent a Client: After signing in, on the MyBA overview page, select the appropriate program from the navigation menu, then select the correct account. Finally, select "Request relief of penalties and interest" under the "Request" heading.

You can also fill out Form RC4288, Request for Taxpayer Relief - Cancel or Waive Penalties and Interest, and send it with one of the following ways:

• online with My Account: select "Submit documents" under the "Correspondence" section

• online with MyBA or Represent a Client: select "Submit documents" from the banner at the top of the page

• by mail to the designated office, as shown on the last page of the form, based on your place of residence

For information on the "Submit Documents online" service, go to canada.ca/cra-submit-documents-online.

For more details on the required supporting documents, relief from penalties and interest, and other related forms and publications, go to canada.ca/penalty-interest-relief.

Payment options

T3 payments can be made online using CRA's My Payment service with a Visa debit, debit MasterCard or Interac Online card from a participating Canadian financial institution. For more information, go to canada.ca/cra-my-payment.

You can send us a cheque or money order payable to the Receiver General. Do not mail cash. To help us credit the correct account, write the trust's name and account number on the front of your payment. Enter on line 72, the amount of the payment.

If you make a payment that your financial institution does not honour, including a cheque on which you put a stop payment, the CRA will charge you a fee. Generally, this fee will be $15 for each returned cheque, plus interest, if applicable.

If you or your representative does not have a bank account at a financial institution in Canada, you or your representative can send your payment:

• using a wire transfer

• an international money order drawn in Canadian dollars

• a bank draft in Canadian dollars drawn on a Canadian bank

For more information, go to canada.ca/payments or contact your financial institution.

Electronic remittances or payments above $10,000

As of January 1, 2024, remittances or payments to the Receiver General of Canada should be made as an electronic payment if the amount is more than $10,000. Payers may face a penalty, unless they cannot reasonably remit or pay the amount electronically. For more information, go to canada.ca/payments.

After you file ▲

Processing times

We can usually assess a T3 return, that was filed by paper, within 17 weeks.

Reassessments

If you need to change a T3 return after you send it to us, do not file another return for that tax year. Send us a completed Form T3-ADJ, T3 Adjustment Request, or a letter providing the details of the change. Indicate the trust's account number, the tax year you want us to change, and send us any supporting documents.

You can submit Form T3-ADJ, T3 Adjustment Request online in My Account at canada.ca/my-cra-account by using the "Submit documents" service. Your authorized representative can access this online service through Represent a Client at canada.ca/taxes-representatives.

We can reassess your T3 return, make additional assessments, or assess tax, interest, or penalties within one of the following:

• three years (four years for mutual fund trusts) from the date of your original notice of assessment or a notice that no tax was payable for the tax year (this period is called the "normal reassessment period")

• six years (seven years for mutual fund trusts) from the date of your original notice of assessment to allow or change a carryback of certain deductions, such as a loss or an unused investment tax credit

Your request should be postmarked before the end of the above periods for us to consider reassessing your return.

The taxpayer relief provisions permit the CRA to issue income tax refunds or reduce income tax payable for individuals and graduated rate estate beyond the normal three-year period. The CRA's discretion to grant relief is limited to any period that ended within 10 years before the calendar year in which a request is submitted or an income tax return is filed.

Testamentary trusts can still benefit from these provisions for tax years that ended on or before December 31, 2015. We usually base our initial assessment on the income you report. Later, we may select the return for a more in-depth review or audit. We can also reassess a return at any time if:

• You have made a misrepresentation because of neglect, carelessness, wilful default, or fraud in either filing the return or supplying information required by the Act.

• You file Form T2029, Waiver in respect of the normal reassessment period or extended reassessment period, with your tax services office before the normal reassessment period expires. If you want to revoke a waiver you previously filed, file Form T652, Notice of Revocation of Waiver. The revocation will take effect six months after you file Form T652.

If requested by T3 Trusts Audit, you can submit the documentation online.

Tax Administration Rules

For 2016 and subsequent tax years, the following administration rules, only available to GRE, extend the period:

• during which the CRA may refund an overpayment of tax

• during which, at the trust's request, the CRA may reassess or make determinations in respect of certain income tax liabilities

• for objecting to a tax assessment

• for filing an agreement to transfer forgiven amounts under the debt forgiveness rules

How to register a formal dispute

If you disagree with your assessment or reassessment, you can make a formal objection.

Filing an objection is the first step in the formal process of resolving a dispute. The time limit for filing an objection is as follows:

• If you are an individual (other than a trust), or filing for a graduated rate estate, the time limit for filing an objection is either one year after the due date for the return or 90 days after the date of the notice of assessment or notice of reassessment, whichever is later. If you did not file your objection on time, you can apply for a time extension within one year of your original time limit to file an objection. You can apply by writing to the Chief of Appeals at your Appeals Intake Centre or by using My Account at canada.ca/my-cra-account if you are an individual, or My Business Account at canada.ca/my-cra-business-account if you are a business owner. Include the reasons why you were prevented from filing on time.

• In every other case, including the assessment of taxes in respect of over-contributions to an RRSP or a TFSA, you have to file an objection within 90 days after the date of the notice of assessment or notice of reassessment.

You or your representative can choose to file your objection by using one of these options:

• making an online submission in "Represent a Client" at canada.ca/taxes-representatives

• sending a completed Form T400A, Notice of Objection - Income Tax Act, or a signed letter to the chief of appeals at your appeals intake centre

For more information about objections and appeals to your income tax assessment or reassessment, go to canada.ca/cra-complaints-disputes.

Elections

The taxpayer relief provisions permit the CRA to accept certain late, amended, or revoked income tax elections. This applies to both of the following elections that we discuss in this guide:

• 164(6) election by an estate (see page 40)

• preferred beneficiary election (see page 55)

A late, amended, or revoked election is subject to a penalty of $100 for each complete month from the due date of the election to the date of the request. The maximum penalty is $8,000.

For more information about the taxpayer relief provisions, go to canada.ca/taxpayer-relief.

What records do you have to keep?

You have to keep your books, records, and supporting documents in case we need to verify the income or loss you reported on the return. Generally, you must keep them for at least six years from the tax-year-end to which they relate. However, you can request permission to dispose of them before the end of this period.

For more information, go to canada.ca/taxes-records, or see Information Circular IC78-10R, Books and Records Retention/Destruction.

Clearance certificate

You can distribute property without a clearance certificate, as long as you keep sufficient property in the trust to pay any amounts owing to the CRA. However, by getting a clearance certificate, you will avoid being personally liable for unpaid taxes, interest, and penalties.

We cannot issue a clearance certificate until you have done both of the following:

• filed all the required returns and we have assessed them

• paid or secured all amounts owing

To ask for a clearance certificate, complete Form TX19, Asking for a Clearance Certificate. You can submit the completed request by mail or fax, or online, using Represent a Client, My Account, or My Business Account as indicated on the TX19.

For more information, see Information Circular IC82-6R, Clearance Certificate.

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