Guest Content

By Brian Wilson, Our Mediation Partner

The Income Tax Act provides that every trust is required to file an income tax return within 90 days from the end of its taxation year. Many trustees choose not to file returns where there is no tax payable by the trust. This is not correct. There is published CRA policy which provides in effect that where total income is $500 or less, a return is not required. In addition, there are several other specific events stated in the CRA policy that require a return to be filed even if there is no income or tax payable. An example is where a property is transferred out of the trust to ensure that the 21 year deemed disposition rules does not apply to property in the trust.

It is also important to note that until a tax return is filed, the tax year will always remain open for possible assessment by CRA.

Taxpayers should consult their advisors to assess the requirement to file a trust return and the risks of not doing so.