CRA considers that a non-GRE trust can have a calendar tax year even where it was dissolved

Ss. 249(1)(b) and 249(5) provide that the taxation year for a graduated rate estate is based on the period for which the accounts are normally made up, which in CRA’s view means that the final T3 return for a GRE is due within 90 days of the final distribution (thereby ceasing the need to make up accounts). For a non-GRE trust, s. 249(1)(c) defines the taxation year to be the calendar year (except as otherwise provided), so that the due date is 90 days thereafter.

Thus, if a non-GRE trust is wound up in mid-February, it might seem that the return cannot be filed until the following year. However, in fact, the T3 assessing personnel will assess such a return that is filed after the final distribution date and before the calendar year end.

The proposition that a non-GRE trust’s taxation year can end after it ceases to exist may generate difficulties in applying any throughout-the-year test to it.

Neal Armstrong. Summary of 29 May 2018 STEP Roundtable, Q.3 under s. 249(5).