14 July 2026 External T.I. 2026-1099261E5 - Subsection 150(1.3)

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: Whether a trust described in subsection 150(1.3) which does not meet any of the exceptions in subsection 150(1.31) that is also a trust described in one of paragraphs 150(1.2)(a) to (r) could be required to file a T3 Return for a taxation year.

Position: Only pursuant to subsection 150(2).

Reasons: See below.

XXXXXXXXXX 2026-109926
K. Robinson

July 14, 2026

Dear XXXXXXXXXX:

Re: Technical Interpretation Request
Subsection 150(1.3)

We are writing in response to your email dated May 6, 2026, regarding subsection 150(1.3) of the Income Tax Act (the “Act”). (footnote 1) In particular, you asked whether a trust described in subsection 150(1.3) which does not meet any of the exceptions in subsection 150(1.31), and is also a trust described in one of paragraphs 150(1.2)(a) to (r), could nevertheless be required to file a T3 Trust Income Tax and Information Return (“T3 Return”) for a taxation year. More specifically, you asked us to consider both paragraph 150(1.1)(b) of the Act and section 204 of the Income Tax Regulations (the “Regulations”).

Our comments

This technical interpretation provides general comments about the provisions of the Act and the Regulations. It does not confirm the income tax treatment of a particular situation involving a specific taxpayer but is intended to assist you in making that determination. The income tax treatment of particular transactions proposed by a specific taxpayer will only be confirmed by this Directorate in the context of an advance income tax ruling request submitted in the manner set out in Information Circular IC 70-6R12, Advance Income Tax Rulings and Technical Interpretations.

Based on your description, the trust is a trust described in subsection 150(1.3) which does not meet any of the exceptions in subsection 150(1.31), and is also a trust described in one of paragraphs 150(1.2)(a) to (r) in a particular taxation year. Accordingly, subsection 150(1.2) would not prevent the application of subsection 150(1.1) for the taxation year.

Subsection 150(1.1) refers both to a taxpayer and an individual. It is our view that a trust described in subsection 150(1.3) is both a taxpayer and an individual for the purposes of section 150.

It is also our view that none of the situations described in subparagraphs 150(1.1)(b)(i) to (iv) would be applicable in respect of a trust described in subsection 150(1.3) for any taxation year. As a result, paragraph 150(1.1)(b) would apply so that a trust described in subsection 150(1.3) which does not meet any of the exceptions in subsection 150(1.31), and is also a trust described in one of paragraphs 150(1.2)(a) to (r), would not be required to file a T3 Return under subsection 150(1) for that taxation year.

In addition, the T3 Return is both a return of income and an information return. Accordingly, where a T3 Return is not required to be filed pursuant to subsection 150(1) for a taxation year, the statutory requirement to file a T3 Return may exist pursuant to section 204 of the Regulations, where the trustee has control of, or receives income, gains or profits in the trustee’s fiduciary capacity, or in a capacity analogous to a fiduciary capacity. Since subsection 150(1.3) applies only for the purposes of section 150 of the Act and section 204.2 of the Regulations, subsection 150(1.3) does not deem a trust described in subsection 150(1.3) to be a trust for the purpose of section 204 of the Regulations. Therefore, section 204 of the Regulations would not, in itself, require a trust described in subsection 150(1.3) to file a T3 Return for the particular taxation year.

Finally, subsection 150(2) provides that every person, whether or not the person is liable to pay tax under Part I for the taxation year and whether or not a return has been filed under subsection 150(1) or (3), must file a return of income for the taxation year upon demand by the Minister. Accordingly, based on the facts provided, the only situation where a T3 Return could be required for a trust described in subsection 150(1.3) which does not meet any of the exceptions in subsection 150(1.31) that is also a trust described in one of paragraphs 150(1.2)(a) to (r) is if the Minister sends a demand under subsection 150(2).

We trust that our comments will be of assistance.

Yours truly,

Marina Panourgias, CPA, CA, TEP
Manager, Trust Section I
Financial Industries and Trusts Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch

FOOTNOTES

Note to reader: Because of our system requirements, the footnotes contained in the original document are shown below instead.

1. Unless otherwise stated, every reference herein to a part, section, subsection, paragraph, or a subparagraph is a reference to the Act.