Expanded trust reporting: who the T3 now catches

For most of their history, a great many Canadian trusts filed nothing. If a trust had no tax payable and no dispositions, there was frequently no return to file. That changed. Canada's enhanced trust reporting rules reversed the default: the question is no longer whether a trust has something to report, but whether it is excused from reporting.

What the enhanced rules did

The rules governing which trusts must file an annual T3 Trust Income Tax and Information Return were enhanced for taxation years ending on or after December 31, 2023. The CRA sets out three main additions for that first year:

• All trusts, unless certain conditions are met, are required to file a T3 return annually.
• Generally, all trusts required to file, other than listed trusts, must include specified information about each reportable entity on Schedule 15, filed with the T3 return.
• Bare trusts were brought inside the reporting rules — a point with its own complicated history, covered in the guide to bare trust reporting.

The CRA's stated purpose is verification: the changes help it confirm that trusts, trustees, beneficiaries and related parties have met their obligations under the Income Tax Act. For a small business family, the effect is that arrangements previously invisible now produce an annual filing with a list of names attached.

Which trusts are now required to file

A trust resident in Canada, other than a listed trust, must file a T3 return annually if the trust is an express trust — or, for civil law purposes, a trust other than one established by law or by judgment. That is a deliberately wide net. For all other trusts, resident and non-resident, a return is required for any year in which a familiar trigger applies: tax payable, a request to file, deemed residence, a disposition or deemed disposition of capital property, a taxable capital gain, or holding property subject to subsection 75(2).

The category doing the real work is the listed trust, which is exempt from both the annual filing requirement and the Schedule 15 disclosure. That list is where nearly all the later amendments landed: additional trusts were added for taxation years ending on or after December 31, 2024, and further additions for years ending on or after December 31, 2025.

What Schedule 15 actually discloses

Schedule 15, Beneficial Ownership Information of a Trust, is the substantive part of the regime. It requests specified information on all trustees, settlors, beneficiaries and controlling persons — the reportable entities. For each, the trust reports:

• Name and address
• Date of birth, if an individual
• Country of residence
• Tax identification number — a social insurance number, business number, trust number, or the identification number used in a foreign jurisdiction for a non-resident trust

Schedule 15 is filed each year with the return when required, even if nothing has changed, although previously reported information can be carried forward. Where a beneficiary's identity is not known or ascertainable with reasonable effort — unborn grandchildren, for instance — the return instead describes the class in enough detail to determine with certainty whether any particular person is a beneficiary.

Two practical points follow. The trustee must collect tax identification numbers from people who may have no interest in providing them, and the CRA notes that a reportable entity failing to do so may face a penalty under subsection 162(6). The trustee should also document the effort made, because that record is the answer if completeness is questioned.

Who is a settlor — and why that answer moved

The definition of settlor shows how live this area is. For taxation years ending before December 31, 2024, it took its meaning from subsection 17(15). For years ending on or after that date, the rules use a broader meaning: any person or partnership that transferred property to the trust, directly or indirectly, other than for fair market value consideration or pursuant to a legal obligation. That can capture a family member who contributed property years ago.

What happens if the filing is missed or incomplete

Failing to file, or filing without complete specified information, may result in a late-filing penalty. Where a trust that failed to file has no unpaid taxes at the deadline, the CRA describes a subsection 162(7) penalty of $25 a day, from $100 to a maximum of $2,500. Where the trust is not a listed trust and a false statement or omission is made knowingly or through gross negligence, a further penalty applies of the greater of $2,500 and 5% of the highest fair market value of trust property in the year — measured against property rather than tax owing, so it can be large for a trust that owes nothing.

What this means for a small business family

Family trusts holding shares of an operating company are the common case. If a trust sits above your corporation, often set up alongside an estate freeze, the checklist is short:

• Confirm whether the trust is a listed trust for the taxation year in question, not in general.
• Build the reportable entity list from the trust deed and the actual history of transfers into the trust, not from memory.
• Collect tax identification numbers early — this is the step that delays filings.
• Keep the deed findable, much like a corporate minute book.

The bottom line

Expanded trust reporting is less about tax than about visibility. A filing may report nothing in dollar terms while disclosing exactly who stands behind an arrangement, which was the point. What makes it awkward is that the boundary of the regime has moved in each of the last several years. Treat the annual determination as work to be redone rather than a conclusion to be reused.

This article is general information for Canadian business owners and is current as of July 2026. It is not tax, legal or accounting advice, and it does not create a client relationship. Tax rules change and your situation is unique — please speak with a CPA before acting on anything here.