February 15, 2024 CLICK HERE TO VIEW MWFS BLOG
Re: 2023 Trust Reporting – CRA Changed Trust reporting rules that may affect you
Happy upcoming 2024 Family Day weekend! I hope your year is off to a good start.
CRA announced new information reporting requirements for trusts that takes effect as of December 31, 2023. This information may affect you now or in the future. Please read - even if you think it doesn’t apply to you at this time.
The new reporting includes mandatory filing of the following trusts (T3 returns):- Estate trusts;
- Altar Ego trusts (no longer can income be recorded directly to beneficiary);
- Lifetime Benefits trusts (no longer can income be recorded directly to beneficiary);
- Family trusts (even if inactive); and
- Bare trusts (whether officially documented or not). Bare trusts include, but are not limited to the following:
- Bare trust agreements documented by your legal advisor(s);
- Bank accounts you have opened in your name but in trust for grandchildren or another friend or relative (that isn’t a registered account such as a RESP);
- Agreements where you have added a child onto the title of real estate (or you have been added to the title of your parent’s property);
- Situations where a child has been added to a bank account(s) or investment accounts(s) in order to assist with administration of that account; and
- Situations where you are named on an account or asset for the purpose of facilitating transactions or the disbursement of the assets to others such as disbursing a relative’s investments or bank account to other relatives or beneficiaries and the account was joint with you and was not part of an Estate T3 filing already.
If you believe you may have a situation outlined above or any other trust type arrangement, please contact Rob, Michael or myself at 604.581.9121 or email service@mwfs.ca. If you think you have something that might be applicable to these new rules, let’s have a conversation about it please.
Often these filings will not result in tax, but failure to file and report will lead to penalties. The T3 return filing deadline is April 02, 2024 (normally within 90 days of the tax year where the trust ends).
Setting up a trust can be time consuming, administratively challenging and expensive. An amazing alternative to this if structured properly can be utilizing a segregated fund (SegFund) through one of our many partner insurance companies. SegFunds inherently have estate planning benefits achieving many or even all of the objectives of a trust, SegFunds allow clients to bypass probate, avoid certain tax reporting requirements, protect assets from creditors, enhance beneficiary proceeds through guarantees resulting in seamless wealth transfer simplifying estate administration and distribution process.
These savings and investment contracts are recognized as a type of insurance contract, they remain within the jurisdiction of insurance regulators rather than securities regulators.
One challenge for clients is how to set things up to accomplish their wishes. Attached, please find Empire Life's ‘Ageless Investing’ flyer illustrating one possibility for consideration.
|
|
