Trust Tax Return Preparation

Everything You Need to Know: T3 Tax Returns

A T3 return refers to the tax form package for a trust. It is also known as the T3 Trust Income Tax and Information Return.

When an individual passes away, their executor must file a T3 tax return for the trust. A testamentary trust is one that is created because of the death of an individual. The terms must be established by either the individual’s will or by a court order.

Meanwhile, an inter vivos trust is one that encompasses various types of trusts relating to individuals who are alive. Examples of these include, an alter ego trust, an employee trust, as well as a health and welfare trusts.

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T3 tax return requirements

Before you can file a T3 tax return, the Canada Revenue Agency (CRA) requires you to apply for a trust account number. A trustee is an individual who can apply for this number. This person can be an administrator, executor, or liquidator.

The representative can range from a variety of individuals. They can be an accountant, such as one from RMP, a bookkeeper, a lawyer, another family member, or one’s common-law partner. The chosen individual remains as one’s representative until either party cancels it or the authorization reaches its expiry date.

Once the number is granted by the CRA., it should be stored and used when handling all trust-related matters.

What information should I have at hand before I fill out a T3 tax return?

Before you begin to fill out the T3 tax return form, there is information that you must have at hand.

Required types of identification information include the mailing address of the trustee, administrator, liquidator, or executor. The name of the individual must also be identified on the form. This is in addition to their phone number and trust account number.

If applicable, then one should identify whether or not the trust resident is on designated Aboriginal settlement lands. One should provide the name and number of the settlement in this instance.

Reporting on the trust’s income is just as integral to the filing process. When it comes to disclosing foreign income and property information, one should report all sources of income. This encompasses locations within and outside of Canada.

If the trust held foreign property that exceeds over $100,000 CAD, then one may need to complete the T1135 form. This refers to the Foreign Income Verification Statement.

As for the direct deposit section of the T3 tax return form, it does not necessarily have to be completed on an annual basis. If the direct deposit information of the trust has not changed, then the section does not have to be filled.

However, if the information did change, then the T3-DD document should be completed. This is called the Direct Deposit Request for T3 form. Another option is to provide one’s new banking information. One should identify their branch number, financial institution number, and bank account number. A void cheque should also be provided by the account owner. This can be accessed through online banking or by visiting your local bank in-person.

What are my next steps?

Filing a T3 tax return can be daunting. Thankfully, RMP is here to help.