Penalties and interest ▲

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 at least $500 of income on your T3 return for 2024 and you also failed to report at least $500 of income on your T3 return for 2021, 2022, or 2023, you may have to pay a federal and provincial or territorial repeated failure to report income penalty. This penalty may be assessed if the 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 2024

• 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 and if the trust is not a listed trust, a person or partnership may be liable to a penalty in the following circumstances:

• they 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, or

  • failed to file a T3 return, or

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

The penalty is equal to the greater of:

• $100

• 50% of the amount of any understated tax and/or 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 could also be subject to penalties if they prepare, or participate in the preparation of, income tax or information returns, forms or certificates on behalf of another person that contain a statement that is known, or would reasonably be expected to be known but for circumstances amounting to culpable conduct to be a false statement.

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

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 "Amending, cancelling, adding, or replacing T3 slips" on page 76.

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.

Number of information returns (slips) by type	Penalty
6 to 50	$125
51 to 250	$250
251 to 500	$500
501 to 2,500	$1,500
2,501 or more	$2,500

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 of a trust starting on the latest of:

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

• the 30th 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 the taxpayer relief provisions, that gives the CRA the 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 ended 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 2024 must relate to a penalty for a tax year or fiscal period ending in 2014 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 2024 must relate to interest that accrued in 2014 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 overview page, select the appropriate program from the left menu and then select the account. Finally, select "Request relief of penalties and interest" from the right menu.

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

• online using My Account: select "Submit documents" from the left menu; then select "Submit documents" again at the bottom of the next page; and then follow the instructions

• online using MyBA or Represent a Client: for a new case select "Submit documents" from the left menu; then select "No case or reference number?"; and finally, select "Request taxpayer relief - cancel or waive penalties and interest (Form RC4288)"

• 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 or Debit Mastercard 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 79 of the T3 return, 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) do 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.

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