Trust Reporting Rules and Deadlines

Introduction
Understanding trust reporting rules and deadlines is essential for families, business owners, real estate investors, and trustees managing any type of trust structure in Canada. Recent legislative changes introduced some of the strictest trust reporting rules in Canadian history, including mandatory filing for bare trusts, expanded disclosure of beneficiaries, detailed reporting of settlors and trustees, and harsher penalties for non-compliance. Trusts that previously never filed returns must now comply, including nominee arrangements, real estate holding structures, and partnership bare trusts. Missing trust filing deadlines exposes taxpayers to significant penalties, reassessments, and potential legal liability. This guide explains everything you need to know about trust reporting rules and deadlines in Canada and Québec.

Legal and Regulatory Framework
Trust reporting rules and deadlines are governed by the Income Tax Act, CRA T3 Trust Guide, T3RET return requirements, new expanded trust disclosure legislation (post-2023), Québec’s Taxation Act, TP-646 Trust Income Return rules, bare trust disclosure requirements, trust residency rules, 21-year deemed disposition provisions, and anti-avoidance legislation. CRA and Revenu Québec now require detailed information about all parties involved in the trust, including name, address, date of birth, residency, and tax identification numbers for beneficiaries, trustees, settlors, and controlling persons. This applies to express trusts, bare trusts, and nominee arrangements, even if no income exists.

Which Trusts Must File a Return?
Under updated rules, almost all trusts must file a return annually. These include family trusts, inter vivos trusts, testamentary trusts, spousal trusts, alter ego trusts, joint spousal trusts, real estate trusts, shareholder trusts, holding trusts, and all bare trusts. A bare trust exists when a trustee holds legal title to property for someone else, such as a parent co-signing a child’s home, a nominee on real estate title, or a shareholder using a trustee to hold shares. These trusts must file returns even if they have no activity, no income, and no distributions.

Exceptions to Mandatory Trust Filing
Excluded trusts include certain government-owned trusts, pension trusts, charitable trusts, graduated rate estates, qualified disability trusts, and certain low-risk trusts with minimal activity. However, most family, real estate, and corporate arrangements no longer qualify for exemption. Many Québec families accustomed to holding property in nominee name are now required to file under the new trust reporting rules and deadlines.

What Must Be Reported on a Trust Return?
Trusts must report all income including interest, dividends, capital gains, rental income, business income, and any other amounts earned inside the trust. Even if income is zero, the trust must provide full disclosure of all parties involved. Required disclosures include trustees, beneficiaries, settlors, and any person with influence or control. Trusts must also report the trust deed, assets held, distributions made, and trust account activity. For Québec trusts, TP-646 requires additional disclosures including beneficiary residency and Québec-specific adjustments.

Important Trust Deadlines
The deadline for filing a T3 Trust Return is 90 days after year-end. Most trusts use a December 31 year-end, making the due date March 31. Québec TP-646 follows the same deadline for Québec-resident trusts. Failure to file on time triggers penalties even when the trust owes zero tax. Bare trusts must also meet the same March 31 deadline. Executors handling estate trusts must meet additional deadlines for estate tax returns.

Penalties for Missing Trust Deadlines
Failure to file triggers penalties starting at $25 per day, with a minimum of $100 and up to $2,500 for regular failures. Enhanced penalties apply for gross negligence or deliberate non-disclosure, reaching $25,000 or more. CRA also imposes penalties for failure to provide beneficial ownership information. Québec imposes separate penalties for missing TP-646, information disclosures, or improper reporting of beneficiary details. These penalties apply even when the trust has no income or activity.

Bare Trust Reporting Requirements
Bare trust reporting rules are among the most significant recent changes. A bare trust exists when legal title and beneficial ownership differ. Examples include a parent on title for a child’s mortgage, a nominee on real estate title, holding companies with trustees, or joint property held for convenience. CRA requires bare trusts to file full trust returns including disclosure of beneficiaries. Québec requires TP-646 filings for bare trusts with Québec situs property or Québec-resident beneficiaries.

Trust Residency Rules
A trust is considered resident where its central management and control reside, not where the trust deed was signed. This depends on where trustees exercise decision-making authority. If a majority of trustees live in Québec, the trust is a Québec-resident trust and must file TP-646 regardless of where assets are located. Residency affects tax liability, reporting obligations, and audit risk.

21-Year Deemed Disposition Rule
Every 21 years, a trust is deemed to dispose of its capital property at fair market value, triggering capital gains tax. Trustees must plan distributions and reorganizations before the 21-year mark. Québec applies similar provisions. Failure to plan can result in significant tax liability for the trust.

Recordkeeping and Documentation Requirements
Trusts must maintain the trust deed, minutes of annual trustee meetings, list of beneficiaries, resolutions for distributions, bank records, investment statements, property documents, Section 85 elections if applicable, corporate records for shares owned by the trust, and detailed identification of all involved parties. CRA requires records for at least six years; Québec may request older records.

Key Court Decisions
Courts have ruled that trusts must follow strict formalities, including documentation of trustee decisions, proper trust administration, and compliance with reporting obligations. Cases confirm CRA’s authority to reassess when trusts fail to maintain records, fail to file returns, or fail to disclose beneficial ownership information. Courts also emphasize that trust residency is based on real control, not nominal trustee designations.

Why CRA and Revenu Québec Audit Trusts
Trusts are audited due to undisclosed beneficiaries, real estate held through trusts, attribution-rule concerns, aggressive income splitting, business ownership in trusts, absence of documented trustee decisions, missing T3 or TP-646 filings, and non-compliance with bare trust reporting rules. Québec especially targets trusts that own real estate or private business shares.

Mackisen Strategy
Mackisen CPA provides full trust compliance support, including preparing T3 and TP-646 returns, identifying bare trust arrangements, disclosing beneficiaries correctly, maintaining trust minute books, preparing trustee resolutions, managing 21-year planning, analyzing residency rules, ensuring attribution and TOSI compliance, reconstructing missing records, and defending trusts in CRA or ARQ audits. Our guidance ensures your trust is fully compliant and protected.

Real Client Experience
A Québec family holding real estate through a nominee arrangement was unaware of filing obligations. Mackisen filed late T3 and TP-646 returns and prevented penalties. Another client with a large family trust received a CRA letter requesting beneficiary disclosure. We prepared all documentation and closed the audit. A business owner with a share freeze needed trust reorganization; we ensured proper reporting and avoided reassessment. A bare trust used in a real estate joint venture triggered CRA review; Mackisen guided full compliance and resolved the matter efficiently.

Common Questions
Do all trusts have to file now? Almost all, including bare trusts.
Does a trust need to file even if it earned no income? Yes.
What is the trust filing deadline? Ninety days after year-end, usually March 31.
Do Québec trusts require separate filings? Yes, TP-646 is required.
Are penalties harsh for late filings? Extremely, even when no tax is owed.
Do trusts need to disclose beneficiaries? Yes, with full identification details.

Why Mackisen
With more than 35 years of combined CPA experience, Mackisen CPA Montreal ensures full compliance with trust reporting rules and deadlines. Whether you need to file a T3 Trust Return, a Québec TP-646, disclose bare trust information, manage a family trust, or defend against CRA or ARQ audits, our expert team provides complete support, precision, and protection for your trust.