New trust reporting on hold but beware of not filing
TAX ALERT |
Authored by RSM Canada
With trust filing season approaching, many tax and trust practitioners were beginning to think the proposed new trust reporting requirements, announced in Budget 2018, were all but forgotten.
The proposed measures would require trusts to report significantly more information about the beneficiaries, trustees and settlors than has previously been required. The proposals also negated an administrative policy that did not require inactive trusts to file unless they had income, gains or were distributing property.
The new rules were intended to be in place for trust years ending on Dec. 31, 2021 or later. With the filing deadline for those calendar year-end trusts approaching (generally 90 days following year-end), it has to date been unclear what is required from a reporting perspective as the 2018 proposals have not yet been introduced or passed into legislation.
The Canada Revenue Agency (CRA) announced that they will not require the new reporting and will not update the relevant forms to reflect the proposed reporting requirements until the legislation receives Royal Assent.
The CRA announcement also indicates that the CRA will follow currently enacted law with respect to trusts, which requires all estates and trusts to file within 90 days of year-end. The previous administrative relief for inactive trusts appears to no longer be effective. Further, the 2018 proposed amendments for new trusts are not yet enacted and therefore will not be administered by the CRA.
While clients and practitioners have received a reprieve from the heightened reporting, all trusts should file trust returns regardless of their level of (in)activity.
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This article was written by Jen Reid and originally appeared on 2022-01-19 RSM Canada, and is available online at https://rsmcanada.com/our-insights/tax-alerts/new-trust-reporting-on-hold-but-beware-of-not-filing.html.
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