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: 1. Where a trust governed by a RRSP is a unitholder of a unit trust, is the former trust required to register for a taxpayer identification number for the sole purpose that it can be included on the T3SCH15 that the unit trust has to file?
2. Should the answer to the first question be negative, is the CRA prevented from requiring trusts governed by a RRSP to register for a taxpayer identification number?
Position: 1. Yes, provided the RRSP trust is a beneficiary and that the unit trust is not subject to one of the exceptions in paragraphs 150(1.2)(a) to (o).
2. Not required given the answer to the first question.
Reasons: When the new reporting requirements for trusts apply, a trust will be required to make an information return (T3SCH15) and as such, it will need to provide information on each of its beneficiary, including the taxpayer identification number of the beneficiary. Where the beneficiary is a trust, the number to provide on the T3SCH15 is the trust account number. Paragraph 237(1.1)(b) mentions that every person and partnership shall provide their designated number to another person, at their request, if the other person or partnership is required to make an information return pursuant to the Act or the Regulations requiring the designated number. Both the trust governed by a RRSP and the unit trust meet the definition of "person". Given the unit trust is required by section 204.2 to make an information return (T3SCH15) that requires the taxpayer identification number of its beneficiary, the trust governed by a RRSP is required to provide its trust account number to the unit trust upon request. Where the RRSP trust does not have such a number, it should make a request to obtain one.
XXXXXXXXXX 2024-100332
Pierre Girard
March 19, 2024
Dear XXXXXXXXXX:
Re: Enhanced Reporting Requirements for Trusts
Unless stated otherwise, all statutory references in this document are to the Income Tax Act (Canada), R.S.C. 1985, c.1 (5th Supp.) (the “Act”), as amended to the date hereof.
We are writing in reply to your inquiry in which you were seeking assistance with respect to the application of section 204.2 of the Income Tax Regulations (“Regulations”) in a situation involving a trust governed by a Registered Retirement Savings Plan (“RRSP”) that is a unitholder of a unit trust.
More precisely, where a trust governed by a RRSP (“RRSP trust”) is a unitholder of a unit trust, you asked our views as to whether the RRSP trust is required to register for a taxpayer identification number (“TIN”) for the sole purpose that it can be included on the return that the unit trust has to file pursuant to section 204.2 of the Regulations.
Our comments
We understand from your request that both the unit trust and the RRSP trust are express trusts resident in Canada. You also added that prior to the introduction of the new reporting requirements, the RRSP trust was not required to file a return of income under Part I of the Act and was not required to register for a TIN.
When new subsection 150(1.2) applies, certain trusts will have to file a return of income where no such obligation existed previously. According to the facts of your request, the unit trust will be required to file a return of income pursuant to paragraph 150(1)(c) for its taxation years ending after December 30, 2023, given that it is not listed in any of the exceptions in paragraphs 150(1.2)(a) to (o) and that none of the exceptions in subsection 150(1.1) applies.
In addition, as a result of section 204.2 of the Regulations, for taxation years ending after December 30, 2023 trusts will be required to provide specific beneficial ownership information by filing an information return, namely the T3SCH15, Beneficial Ownership Information of a Trust (“Schedule 15”), unless one of the exceptions in paragraphs 150(1.2)(a) to (o) applies.
Under subsection 204.2(1) of the Regulations, the information to be provided includes the name, address, date of birth, jurisdiction of residence and TIN for each person who, in the year, is a trustee, a beneficiary or a settlor of the trust, as well as each person who has the ability to exert influence over trustee decisions regarding the appointment of income or capital of the trust. The reference to the TIN in subsection 204.2(1) of the Regulations ties in with the definition of TIN provided in subsection 270(1). In particular, subparagraph 270(1)(a)(iii) provides that TIN means the number used by the Minister, including an account number issued to a trust. As a result, for the purpose of the new reporting requirements for trusts, the TIN corresponds to the trust account number (“TAN”) issued by the Minister to the trust.
In light of the above, the unit trust will be required to file the Schedule 15 and provide information in respect of each trustee, settlor and beneficiary of the trust. Given the RRSP trust is a beneficiary of the unit trust, the latter will be required to provide the name, address, jurisdiction of residence and TAN of the RRSP trust.
Paragraph 237(1.1)(b) requires, among other things, that a person provides their designated number to another person, at their request, if that other person is required to make an information return requiring the designated number. For the purpose of that provision, paragraph 237(1.2)(b) indicates that the designated number of a person is, in the case of a trust, its TAN.
Therefore, upon request by the unit trust, the RRSP trust will need to provide its TAN because this number is required in the Schedule 15 that the unit trust has to file with its return of income.
As such, should the RRSP trust not have a TAN, it should ask the Minister to be issued one.
We trust these comments will be of assistance.
Yours truly,
Gillian Godson
Manager, Administrative Law Section I
Specialty Tax Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch
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