If you have investment income from mutual funds in non-registered accounts or in a trust, you’ve probably already had your T3 delivered in the mail. Typically these tax forms arrive around March 31st, just in time to file your taxes with the Canadian Revenue Agency (or Revenu Quebec) for the April 31st deadline. Quebecers, as usual, do things a little differently, and you’ll be receiving a relevé 16 form instead. However, every province and territory has its own unique package of forms; they just still call them a T3.
What Should You Know About T3s? Even if you benefit from investment income from multiple mutual funds or trusts, don’t wait for multiple T3s before you get started on your taxes. If you take a look at the form you’ve received, the single T3 likely has all of your trust incomes added together. You also may not receive at T3 at all if your “other income” (interest) is less than $50 or your dividends and capital gains are less than $1.00. A T3 Statement of Trust Income Allocations and Designations will show all of your income from interest, dividend, and capital gains separately, because each of these forms of income are taxed at different rates.
Your Trust Is like Another Member of Your Family. Family trusts are a type of personal trust, and in many ways, they act as an individual taxpayer. And just as filing your taxes as a person can seem to require copious amounts of paperwork, you’ll need several documents for the trust. You’ll need the date the trust was created, or (if this is the first year of the trust’s existence) a copy of the original trust document (for an inter vivos trust) or the will (for a testamentary trust) that created it. You’ll also need to have careful documentation of all sources of income for the trust, and you’ll have to report all of its income. Finally, if the trust has distributed any payments or property to beneficiaries or if it’s lost money to business losses or if it’s paid any trustee fees, you’ll need documentation for all those as well. These payments and losses reduce the trust’s incomes and the taxes owing.
Online Filing for Trusts. As of this year, trust admins will have the opportunity to file any simple T3 Trust Income Tax and Information Return online. The Government of Canada claims that the online filing system should be fast and easy and that they offer a secure internet file transfer service. Keep in mind that if you file your own taxes, you will likely need to update your tax software and forms to meet the required conditions. However, we generally recommend that affluent Canadians with multiple sources of income strongly consider choosing a trusted tax expert to handle their complicated estate and protect all of their careful tax planning.
At MacMillan Estate Planning, our team of advisors focuses on careful tax planning that will benefit your family between generations and as your family grows and changes over time. We don’t offer tax filing in-house at MacMillan, but we are able to recommend professionals we trust to only offer superior work. If you believe your estate can benefit from our holistic, personalized tax plans, contact us today for a free consultation.