Update on trust reporting requirements

On August 9, Finance Canada released draft legislation on a broad range of initiatives including revised trust reporting rules. These rules were originally announced in the 2018 federal budget and draft legislation was previously released on February 4, 2022 (see our February 8, 2022 news item below for more information). Changes in the August 9 release include the following:

• the list of trusts not subject to the rules under subsection 150(1.2) has been expanded to include trusts under or governed by employee profit sharing plans, registered supplementary unemployment benefit plans and first home savings accounts (which were proposed in the 2022 federal budget)
• the situations described in proposed subsection 204.2(2) of the regulations where the filing requirement will be deemed to have been complied with has also been expanded to include:

• certain indigenous groups, communities or people if prescribed conditions are met
• trusts where some but not all of the units are listed on a designated stock exchange (in this case, only information on the unlisted unit holders must be reported)

Otherwise, the rules have not changed since the February 4 release. In particular, proposed subsection 150(1.3) remains and will create a reporting requirement to ensure that so-called bare trustee arrangements are subject to the rules. It was hoped that the government would consider a more streamlined approach for obtaining beneficial ownership information that would not involve filing a T3 return. 

The effective date of the proposals has also not changed – they will apply for taxation years ending after December 30, 2022.