written by: Catherine Fulcher
In our previous correspondence on trusts, we introduced the new rules that were supposed to take effect for the 2021 tax year. The new rules, very simply, require trusts to disclose additional information regarding beneficial ownership, Settlors and Trustees on an annual basis. This meant that many trusts which previously had no filing requirements under the old rules would now be required to file yearly with additional disclosure information, or face penalties.
In order to proactively prepare for these changes, the team at Farnham + Company has been compiling the information as required under the new rules. You might recall receiving a summary for review and confirmation.
The Canada Revenue Agency on January 14, 2022, posted the following update:
“The legislation to support this proposed measure is pending. The CRA will administer the new reporting and filing requirements once there is supporting legislation that receives Royal Assent. The CRA will continue to administer the existing rules for trusts, under enacted legislation. The proposed beneficial ownership reporting requirements will not be part of the published 2021 T3 income tax return. This note will be updated when more information is available. You should not delay filing your 2021 T3 tax return.”
Based on this new announcement, our understanding is that the new rules will be postponed for 2021 and would presumably begin to apply in 2022.
For trusts that previously have not been required to file, but for which we have now obtained a Trust number and the relevant contact information, our intent is to file nil returns for 2021, unless requested otherwise by the Trustees. This will simplify the transition to the new reporting and filing requirements for next year. To be clear, we will not be providing the additional disclosures required under the proposed legislation.
If you have questions or concerns, please contact your Farnham + Company representative.