Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Principal Issues: When is the final trust return due in the year of wind up of a personal trust?
Position: For a graduated rate estate, the final return is due 90 days from the date of wind up. For all other trusts, the final return is due 90 days from the end of the calendar year in which the wind up occurs; however, the trustee may choose to file the return early.
Reasons: The law does not allow for a trust, other than a graduated rate estate, to have a taxation year end other than a calendar year in the year of wind up.
2018 STEP CRA Roundtable – May 29, 2018
QUESTION 3. Trust return due date in the year of wind up
Where a trust winds up, by distributing all of its property to its beneficiaries, does the T3 Trust Income Tax and Information Return (T3 Return) need to be filed within 90 days of the date of wind up, or does the normal (calendar) year-end govern when the tax return must be filed?
CRA Response
For the purpose of our response, we assume that you are contemplating the wind up of a personal trust. We also note where another event occurs in the year in which the trust or estate is wound up, the other event may result in a deemed year end and the filing due date of the T3 Return would generally be 90 days after the deemed year end.
As the T3 Return is both a return of income and an information return, paragraph 150(1)(c) of the Income Tax Act (the “Act”) and subsection 204(2) of the Income Tax Regulations are relevant as both provisions require the T3 Return to be filed within 90 days from the end of the trust or estate’s taxation year.
For a graduated rate estate, paragraph 249(1)(b) defines a taxation year, for purposes of the Act, to be the period for which the accounts of the estate are made up for purposes of assessment under the Act. This combined with subsection 249(5), causes the taxation year to cease when the period of accounts end. In the year of wind up, this would be the date of final distribution of the assets as trust law suggests that a trust may cease to exist at this point in time.
Paragraph 249(1)(c) defines, for purposes the Act, a taxation year of a trust, other than a graduated rate estate, to be a calendar year, except as expressly provided otherwise. In the year that a trust is wound up and final distribution of assets occur, there is no provision that would cause the taxation year to be a period other than a calendar year, regardless of when the period of accounts cease.
Therefore, it is our view that the filing deadline for a graduated rate estate in the year of wind up is 90 days from the final distribution of trust assets. For all other trusts, the filing deadline will be 90 days from the end of the calendar year in which the wind up occurs. As the T3 Guide notes, in this case the return for the year up to the final distribution may be filed early.
Tara Mathanda
2018-074408
All rights reserved. Permission is granted to electronically copy and to print in hard copy for internal use only. No part of this information may be reproduced, modified, transmitted or redistributed in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, or stored in a retrieval system for any purpose other than noted above (including sales), without prior written permission of Canada Revenue Agency, Ottawa, Ontario K1A 0L5
© Her Majesty the Queen in Right of Canada, 2018
Tous droits réservés. Il est permis de copier sous forme électronique ou d'imprimer pour un usage interne seulement. Toutefois, il est interdit de reproduire, de modifier, de transmettre ou de redistributer de l'information, sous quelque forme ou par quelque moyen que ce soit, de facon électronique, méchanique, photocopies ou autre, ou par stockage dans des systèmes d'extraction ou pour tout usage autre que ceux susmentionnés (incluant pour fin commerciale), sans l'autorisation écrite préalable de l'Agence du revenu du Canada, Ottawa, Ontario K1A 0L5.
© Sa Majesté la Reine du Chef du Canada, 2018
Email this Content