10 March 1998 Ministerial Letter 9733818 - T3 SLIPS - FILING DEADLINE

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.

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.

ADM'S Office (2) 97-07547M
Return to Rulings, 15th Floor, Albion Tower
Pending

XXXXXXXXXX

Dear XXXXXXXXXX:

The Honourable Herb Dhaliwal, Minister of National Revenue, has asked me to reply to your letter of November 9, 1997, concerning the filing date for T3 slips by a mutual fund trust. A copy of your letter was sent to Mr. Dhaliwal by the Honourable Paul Martin, Minister of Finance, on December 8, 1997.

You have indicated that since most T1 Returns must be filed by April 30, individuals who receive T3 slips from a mutual fund trust may have less than 30 days to prepare and file their income tax returns. In these circumstances, you have expressed a concern that there is a great deal of pressure on individuals and their accountants to have these returns completed by April 30. To alleviate these concerns you have suggested that the filing deadline for T3 slips be reduced from 90 days to 60 or 75 days. You have also pointed out that reducing this deadline to 60 days would make it consistent with the 60 day deadline mutual fund corporations have for filing T5 slips.

The Department has recently reviewed the filing requirements for trusts and, in this regard, I would like to offer the following comments. The trustee of a mutual fund trust is required to prepare and file an income tax return and information return for the trust. The prescribed form for this is the T3 Trust Income Tax and Information Return and it must be filed within 90 days of the end of the taxation year. Since a mutual fund trust is an inter vivos trust its taxation year has to coincide with the calendar year. Before a mutual fund trust's T3 return can be prepared, the trustee must first determine the income of the trust and, in many instances, a mutual fund trust itself can be the recipient of information slips (e.g., T5 slips for interest or dividends). In such cases, the trustee may not be in a position to determine the income of the trust before the end of February. As a result, the trustee has only one month in which to complete the calculation of the income of the trust, determine the amount of income to allocate or flow through to the beneficiaries, and file the required T3 return.

A mutual fund corporation is also required to file both an income tax return and an information return but these are separate returns and the filing deadline for each of the returns is different. The T2 Corporation Income Tax Return is required to be filed within 6 months from the end of the corporation's taxation year which may not necessarily be the calendar year, whereas a T5 Information Return has to be filed by the end of February in each year, that is 60 days after the end of the calendar year. The T5 slips issued will reflect only the dividends paid by the mutual fund corporation to a shareholder in the preceding calendar year and, unlike T3 slips, they do not reflect an allocation or flow-through of income.

Although we recognize that reducing the filing deadline from 90 days to 60 days could benefit some T3 slip recipients, such a change would also impose an onerous deadline on trustees. Considering that a trustee currently has less time to file the trust's income tax return (three months) than corporations (six months) and individuals (four months), changing the T3 filing requirements to further reduce the filing deadline was not considered appropriate at this time.

I appreciate the opportunity to respond to your concerns.

							Yours sincerely,

							Denis Lefebvre
							Assistant Deputy Minister
							Policy and Legislation Branch

George Keable
957-2046
February 10, 1998
973381

Finalized March 2, 1998 LC/gt