It was nice to see a clarification from CRA today on an issue that garnered far too much attention in the charity sector, namely the issue of filing T3 Trust Income Tax and Information Returns for internal trusts.   CRA clarified that it is maintaining its current position that it has had for a long time that charities will not be required to file the T3 for internal trusts.  All the assets covered by these internal trusts will be reported on by the registered charity as it has always done through the T3010.

We have blogged about it below:

No further update on the T3 filing for express trusts but optimistic that there will be further guidance soon (October 28, 2023)

We noted in that blog less than 2 weeks ago:

My position has not yet changed.  I am hoping that there will be some communication – preferably before the end of the year in which CRA clarifies their position.   Also possible is Finance could be more explicit in their legislation, but a CRA clarification would be just fine.

Well, today, we have that clarification.  Keep in mind that CRA had never indicated a change in their position.  Some people at Finance had suggested that they think a provision means something – but as we all know, it is CRA that is responsible for the enforcement of the ITA and not Finance.

Here is our first blog on the topic:

Will Canadian registered charities need to file T3 forms for “express trusts” beginning next year?

Here is the note from CRA today:

Charities and giving – What’s new

New trust reporting requirement for tax years ending on or after December 31, 2023

On December 15, 2022, Bill C-32, the Fall Economic Statement Implementation Act, 2022, received Royal Assent. This bill amended the Income Tax Act to expand the filing requirements for trusts.

The Canada Revenue Agency (CRA) understands that registered charities are seeking clarification on how these new requirements apply to internal trusts.

The CRA will not require registered charities to file the T3, Trust Income Tax and Information Return, for internal trusts.

Internal trusts are those created when a charity:

• receives property as a gift that is subject to certain legally enforceable terms and conditions; and,
• holds that property as the trustee of the trust.

Registered charities report on their finances and activities annually by filing the T3010, Registered Charity Information Return. These returns include aggregate information about all the property a charity holds, including internal trusts. Registered charities should ensure these annual returns are complete and accurate, as they serve important public information and compliance purposes.

We’re here to help

If you have any questions on the new requirements, please call our Charities Directorate client service team at 1-800-267-2384. Our representatives are available to help you Monday through Friday, from 9 am to 5 pm, local time.