Prepare for upcoming trust reporting rules

Prepare for upcoming trust reporting rules

Many Canadian trusts will soon have to face new enhanced reporting requirements.

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Before these changes come into effect, it's a good idea to familiarize yourself with the new rules and undertake planning that may alleviate their impact. In particular, you may want to give yourself enough lead time to obtain the required information and understand how you can meet your obligations so that enhanced penalties for the failure to comply will not apply. The new trust reporting rules apply to tax years ending after December 30, 2021 (i.e. effectively the rules apply to a trust's tax year ending on December 31, 2021 and subsequent).

These new rules may be onerous for certain trusts. For example, an affected trust will have to provide information pertaining to a trust's beneficiaries, trustees, settlors and even protectors on its income tax return. Trusts that fail to report required information may face significant penalties of up to 5% of the highest total fair market value of all property held within the trust during the year.

Download this edition of the TaxNewsFlash to learn more.

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