T3 Trust Guide

2022

T4013(E) Rev. 22
Find out if this guide is for you
A T3 Trust Income Tax and Information Return (T3 return) treated similarly. In calculating the income of an estate,
is both a return of income and a general information return. references in this guide to a “trust” or “trust property”
A T3 trust return serves to report not only information include “estate” or “estate property.”
about the reporting trust, but also additional information,
“The Act” refers to the Income Tax Act. Unless otherwise
such as that affecting the taxation of persons (for example,
stated, all legislative references within this guide are to the
beneficiaries or settlors) having some connection to the
Income Tax Act and the Income Tax Regulations. You can
trust.
find a list of these references in the Index at the end of the
This guide provides information on how to complete the T3 guide.
return, the T3 slip, Statement of Trust Income Allocations
For a list of Income Tax Act references, go to https://laws
and Designations, and the T3 Summary, Summary of Trust
-lois.justice.gc.ca/eng/acts/I-3.3/index.html.
Income Allocations and Designations.
For a list of Income Tax regulations references, go
Use this guide if you are filing a T3 return for either a
to https://laws-lois.justice.gc.ca/eng/regulations
testamentary trust or an inter vivos trust. For more
/C.R.C.,_c._945/index.html.
information, see “Types of trusts” on page 7.
If you need more information after reading this guide,
The word “you” throughout the guide refers to the trustee,
visit canada.ca/taxes, or call 1-800-959-8281.
executor, administrator, liquidator, or anyone preparing the
T3 return for a trust. For tax purposes, estates and trusts are

The CRA’s publications and personalized correspondence are

available in braille, large print, e-text, or MP3 for those who have
a visual impairment. For more information, go to canada.ca/cra
-multiple-formats or call 1-800-959-8281.
If you are outside Canada and the United States, call
613-940-8495. The CRA only accepts collect calls made through
telephone operators. After your call is accepted by an automated
response, you may hear a beep and notice a normal connection
delay.

La version française de cette publication est intitulée T4013, T3 – Guide des fiducies.

canada.ca/taxes
What’s new for 2022
We list the service enhancements and major changes below, including announced income tax changes that are not yet law at
the time this guide was published. If they become law as proposed, they will be effective for 2022 or as of the dates given.
For more information about these changes, see the areas outlined in colour in this guide.

British Columbia clean building tax Filing of information returns

credit Budget 2021 originally announced that the threshold for
The clean buildings tax credit is a refundable income tax mandatory electronic filing of information returns for a
credit for qualifying retrofits that improve the energy calendar year would be lowered from 50 to 5 information
efficiency of eligible commercial and multi-unit residential returns with respect to the filing of particular types of
buildings with four or more units. The retrofit must information returns after the end of 2021.
improve the energy efficiency of an eligible building and This lowering of the threshold is now proposed to come
meet energy-use targets. The credit amount is 5 percent of into effect for the filing of information returns after the 2023
qualifying expenditures paid on the retrofit. calendar year.
Claim this credit on line 65 of the T3 Return. For the latest information about the penalty for not filing
information returns over the Internet, go to
Employee ownership trusts canada.ca/mandatory-electronic-filing. You can also
subscribe to our email distribution list about the electronic
Employee ownership trusts encourage employee filing of information returns at canada.ca/cra-email-lists.
ownership of a business, and facilitate the transition of
privately owned businesses to employees. As originally
announced in Budget 2021, the government has held Reporting Requirements for Trusts
consultations with stakeholders to examine what barriers To improve the collection of beneficial ownership
exist to the creation of these trusts. information with respect to trusts, Budget 2018 proposed
Budget 2022 proposed the creation of the Employee that all non-resident trusts that currently have to file a T3
Ownership Trust, under the Income Tax Act. The return and express trusts that are resident in Canada, with
government will continue to finalize the development of some exceptions, would have to provide additional
rules for the Employee Ownership Trust and to assess information on an annual basis. As a result, certain trusts
remaining barriers to the creation of these trusts. would be required to file a T3 return where in previous tax
years they did not. To support these new reporting
requirements, Budget 2018 also proposed to introduce new
Yukon business carbon price rebate penalties for a failure to file a T3 return, including a
Trusts can claim the Yukon Business Carbon Rebate. To required beneficial ownership schedule, in circumstances
claim this rebate complete Part 2 of Schedule YT(S14), where the schedule is required.
Yukon Government Carbon Price Rebate, and enter this The 2022 Fall Economic Statement confirmed the
amount on line 67 of the T3 Return. Government’s intention to proceed with this previously
If you are claiming this rebate for the tax years 2019, 2020 announced tax measure, as modified to take into account
and 2021, you will need to send a T3-ADJ Adjustment consultations and deliberations since its release. These
Request, requesting an adjustment to line 67. reporting requirements for trusts and related penalties will
be effective for tax years ending after December 30, 2023.
For more information, see 5011-PC Yukon Information
Guide. For more information, see Notice of Ways and Means
Motion to amend the Income Tax Act, Related Texts and
Other Texts (canada.ca) at https://www.budget.canada.ca
Web access code /2022/report-rapport/nwmm-amvm-01-en.html and
In October 2023, the Web Access Code digital service will Government Bill (House of Commons) C-32 (44-1) - Royal
be enhanced to allow information return filers to create, Assent - Fall Economic Statement Implementation Act, 2022
view, replace, or inactivate their web access code. at https://www.parl.ca/DocumentViewer/en/44-1/bill/C
-32/royal-assent.
For more information, or to obtain your web access code,
visit apps.cra-arc.gc.ca/ebci/leb0/wacretrieve
/pub/disclaimer.action?request_locale=en_CA.
Table of contents
Page Page

Before you start ................................................................... 5 Schedule 9 – Income Allocations and Designations to

Beneficiaries ................................................................. Ÿ 45
Definitions ......................................................................... 5
Schedule 10 – Part XII.2 Tax and Part XIII
Chapter 1 – General information ..................................... 7 Non-Resident Withholding Tax .................................... 53
Types of trusts .................................................................. Ÿ 7 Schedule 11 – Federal Income Tax .................................... 56
Code number for the type of trust ..................................... 16 Schedule 11A – Donations and gifts tax credit
Who should file ................................................................ Ÿ 16 calculation ........................................................................ 59
Trust account number ......................................................... 17 Schedule 12 – Minimum Tax ............................................. 61
What to file ....................................................................... Ÿ 18 Provincial and territorial income tax ............................ Ÿ 61
Form T3-DD, Direct Deposit Request for T3 .................... 18
Chapter 4 – T3 slip and T3 Summary ............................. 62
When to file ...................................................................... Ÿ 18
How to file the T3 slip and T3 Summary ..................... Ÿ 62
Tax year-end and fiscal period .......................................... 18
Distributing the T3 slip ................................................... Ÿ 63
How to file the T3 return ................................................ Ÿ 19
Amending, cancelling, adding, or replacing T3 slips ..... 63
Penalties and interest ...................................................... Ÿ 20
Recipient identification number .................................... Ÿ 64
Payment options .................................................................. 21
How to complete the T3 slip .......................................... Ÿ 64
After you file .................................................................... Ÿ 21
Appendix A – T3 slip and T3 Summary ..................... Ÿ 68
Chapter 2 – Completing the T3 return ............................ 23
Step 1 – Identification and other required Digital services ................................................................... 71
information ................................................................... Ÿ 23 My Account & MyCRA ...................................................... 71
Step 2 – Calculating total income: Lines 1 to 12............... 25 Submitting and filing documents online related to T3 .. 71
Thin capitalization – Rules for trusts ................................ 25
For more information ........................................................ 74
Step 3 – Calculating net income: Lines 13 to 31 ............... 28
Taxpayer Bill of Rights ....................................................... 74
Step 4 – Calculating taxable income: Lines 32 to 43 ........ 30
If you need help ................................................................... 74
Step 5 – Summary of tax and credits: Lines 44 to 72 ....... 31
Direct deposit....................................................................... 74
Chapter 3 – Trust schedules and forms........................... 33 Forms and publications ...................................................... 74
Schedule 1 – Dispositions of Capital Property ................ 33 Getting information by telephone..................................... 74
Form T1055, Summary of Deemed Dispositions Teletypewriter (TTY) users ................................................ 74
(2002 and later tax years)............................................. 41 Giving or cancelling an authorization .............................. 74
Form T2223, Election Under Subsection 159(6.1) of Complaints and disputes ................................................... 75
the Income Tax Act, by a Trust to Defer Payment
Index ..................................................................................... 76
of Income Tax ............................................................... 43
Schedule 8 – Investment Income, Carrying Charges,
and Gross-up Amount of Dividends Retained by
the Trust ........................................................................ Ÿ 43

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Before you start Did you know that?
The Canada Revenue Agency may apply a penalty if an
Find out if you need to read the whole information return (T3 slip) is missing the required
guide recipient identification number. For more information, see
“Recipient identification number” on page 64.
If you are filing a T3 return for an estate that has only
pension income, investment income, or death benefits,
you do not need to read the entire guide. We have used Definitions
the ▲ symbol to lead you to the information you may
need. This symbol appears in the table of contents, in the In this section, we define the technical terms we use in this
right margins of the guide, and in the left margins of the guide.
return beside the lines that may relate to your situation. Administrator – a person appointed by a court to settle the
Before you begin, be sure to read: estate of a deceased person, generally in situations where
an individual dies without a will or a testator’s will does
■ “Chapter 1 – General information” on page 7 not name an executor.
■ “Step 1 – Identification and other required information” Allocate, allocation – to assign or set apart income from the
on page 23 trust to a beneficiary. An amount can only be allocated to a
■ “Chapter 4 – T3 slip and T3 Summary” on page 62 beneficiary when one of the following applies:
■ the beneficiary is entitled to the income in the year that it
Determine the residence of the trust or is earned by the trust, under the trust document
estate ■ the trust makes a preferred beneficiary election to
A trust may be either factually resident, non-resident or include the trust income in the beneficiary’s income
deemed to be resident in Canada. To assist in making this ■ the beneficiary is paid income in the year that it is earned
determination see Income Tax Folio S6-F1-C1, Residence of by the trust, at the discretion of the trustee
a Trust or Estate.
In most cases, the amounts you allocate have to be included
in the beneficiary’s income, and they are deducted from the
Non-resident trusts or deemed trust’s income. For exceptions to this general rule,
resident trusts see “Exceptions and limits to income allocations”
If you are the trustee for a non-resident trust, or a deemed on page 47.
resident trust (described on page 10), there are special rules Arm’s length – refers to a relationship or a transaction
that apply in some situations. Not all of these rules are between persons who act in their separate interests. An
covered in this guide. For more information, contact arm’s length transaction is generally a transaction that
the numbers listed on page 20. reflects ordinary commercial dealings between parties
acting in their separate interests.
Which tax package should you use? A taxpayer and a personal trust (other than a specified trust
Use the provincial or territorial forms package for the described in “Chart 1 – Types of Trusts” on page 9) are
province or territory where the trust was resident on the deemed not to deal with each other at arm’s length if the
last day of its tax year. person, or anyone not dealing at arm’s length with the
person, is beneficially interested in the trust.
To get any schedules and forms that you may need, go to
canada.ca/cra-forms-list, or call 1-800-959-8281. Once you Related persons – are not considered to deal with each
have completed the necessary schedules, forms, and other at arm’s length. Related persons include individuals
statements, you will be ready to complete the T3 return. If connected by blood relationship, marriage, common-law
you are filing a paper return, send us all required partnership or adoption (legal or in fact). A corporation and
documents with the return. another person or two corporations may also be related
persons.
Note
The province of Quebec collects its own provincial Unrelated persons – may not be dealing with each other at
income tax. Do not calculate provincial income tax on arm’s length at a particular time. Each case will depend
the trust’s federal return if it was resident in Quebec on upon its own facts. The following criteria will be
the last day of its tax year. If the trust had income from considered to determine whether parties to a transaction
a business with a permanent establishment in another are not dealing at arm’s length:
province or territory, you have to calculate that ■ whether there is a common mind that directs the
province’s or territory’s income tax on the trust’s federal bargaining for the parties to a transaction
tax return.
■ whether the parties to a transaction act in concert
without separate interests; “acting in concert” means, for
example, that parties act with considerable
interdependence on a transaction of common interest

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■ whether there is de facto control of one party by the other that relate directly to the type of income, such as a dividend
because of, for example, advantage, authority or tax credit or pension income amount. Generally, you report
influence amounts designated to a beneficiary in the appropriate box
on the T3 slip.
For more information, see Income Tax Folio S1-F5-C1,
Related Persons and Dealing at Arm’s Length. Distribute, distribution – to divide the trust property
among the beneficiaries according to the terms of the trust
Non arm’s length – generally refers to a relationship or
document, or according to the applicable law.
transaction between persons who are related to each other.
Electing beneficiary – for a tax year of a qualified disability
However, a non-arm’s length relationship might also exist
trust, means an individual named as a beneficiary by the
between unrelated individuals, trusts, partnerships or
particular individual (that is the deceased individual) in
corporations, depending on the circumstances. For more
the instrument under which the trust was created, and who
information, see the definition of “Arm’s length.”
meets all of the following conditions:
Beneficiary – includes the person for whose benefit the
■ includes in their return of income for the trust year, an
trust is created, the person to whom the amount of an
election made jointly with the trust, that the trust will be
insurance policy or annuity is payable, or the unit holder
a qualified disability trust for the trust year
of a mutual fund trust.
■ must be eligible for the disability tax credit for the
Common-law partner – this applies to a person who is not
beneficiary’s tax year in which the trust’s year-ends
your spouse (see page 7), with whom you are living in a
conjugal relationship, and to whom at least one of the ■ does not elect with any other trust to be a qualified
following situations applies. They: disability trust for the other trust’s tax year that ends in
the beneficiary’s tax year
a) have been living with you in such a relationship for at
least 12 continuous months Executor – an individual or trust institution appointed by a
testator (named in their will) to administer their estate. The
b) are the parent of your child by birth or adoption
executor may be confirmed by a court. See the definition of
c) have custody and control of your child (or had custody “Testator” on page 7.
and control immediately before the child turned
Exempt property – is trust property that, if disposed of, any
19 years of age) and your child is wholly dependent on
income or capital gain resulting from the disposition is
that person for support
exempt from Canadian tax, either because the trust is not
For 2001 and later years, a person (other than a person resident in Canada, or because of a tax treaty.
described in b) or c) on this page) will be your common-law
Express trust – a trust generally created with the settlor’s
partner only after your current relationship with that
express intent, usually made in writing (as opposed to a
person has lasted at least 12 continuous months.
resulting or constructive trust, or certain trusts deemed to
Reference to “12 continuous months” in this definition arise under the provision of a statute).
includes any period that you were separated for less than
Gift – generally a voluntary transfer of property (including
90 days because of a breakdown in the relationship.
money) without valuable consideration. However, a
Contribution of property – generally refers to a transfer or transfer of property where the donor receives an advantage
loan of property, other than an “arm’s length transfer” (as is still considered a gift as long as the advantage does not
defined in subsection 94(1)) to a non-resident trust by a exceed 80% of the fair market value (FMV) of the
person or partnership. A contribution is also considered to transferred property, or we are satisfied the property was
have been made by a person or partnership where the transferred with the intention of making a gift.
person or partnership makes (or becomes obligated to
Generally, the eligible amount of a gift or monetary
make) a particular transfer (other than an “arm’s length
contribution is the amount by which the FMV of the gifted
transfer”) as part of a series of transactions or events that
property exceeds the amount of the advantage, if any,
includes another transfer or loan (other than an “arm’s
received or receivable for the gift. There may be situations
length transfer”), to the trust, by another person or
where the eligible amount may be deemed to be nil or the
partnership.
fair market value may be deemed to be less than the actual
In these circumstances, the other transfer or loan is fair market value of the property. For more information, see
considered to be a contribution to the trust by the person or Pamphlet P113, Gifts and Income Tax, and Income Tax
partnership only to the extent that the other transfer or loan Folio S7-F1-C1, Split-receipting and Deemed Fair Market
can reasonably be considered to have been made in respect Value.
of the particular transfer or loan, or the obligation to make
The advantage is generally the total value of any property,
the particular transfer or loan.
service, compensation, use, or any other benefit that the
Deemed disposition – used when you are considered to trust, or a person not dealing at arm’s length with the trust,
have disposed of property, even though you did not is entitled to as partial consideration for, in gratitude for, or
actually sell it. in any other way related to the gift. The advantage may be
contingent or receivable in the future
Designate, designation – to keep the identity of certain
types of allocated income or credits. In this way, the Legal representative – an individual or organization
beneficiaries can take advantage of deductions or credits appointed by a legal document (for example, testator’s will,

6 canada.ca/taxes
or court order). Includes, administrator, executor, Generally, a trust is created when it is properly established
liquidator, or trustee. and there is certainty of:
Liquidator – in Quebec, the liquidator is responsible for ■ the intent to create a trust
distributing the assets of all estates established after
■ the property to be placed in trust
December 31, 1993. For estates with a will, the liquidator’s
role is similar to an executor’s. For estates without a will, ■ the beneficiaries of the trust
the liquidator acts as the administrator of the estate.
Trustee – an individual or trust institution that holds legal
Preferred beneficiary – a person resident in Canada who is title to property in trust for the benefit of the trust
a beneficiary under the trust at the end of the year, and who beneficiaries. The trustee includes an executor,
meets one of the following conditions: administrator, assignee, receiver, or liquidator who owns
or controls property for some other person.
■ they qualify for the disability amount for the tax year
that ends in the trust’s tax year Vested interest – an immediate fixed interest in property,
although the right of possession and enjoyment may be
■ they:
postponed.
– are 18 years of age or older before the end of the tax
Will – a legally enforceable document that declares the
year
intentions about disposal and administration of the
– are dependant of another individual for the tax year testator’s estate after their death. It is effective only at death
because of a mental or physical impairment and can be revoked at any time before death.
– have income for the tax year, not including income
from a preferred beneficiary election, which does not
exceed the maximum basic personal amount
Chapter 1 – General information
In addition, they must be one of the following: This chapter provides general information on the different
types of trusts and the filing requirements for each.
■ the settlor of the trust (see the definition of “settlor” on
this page)
Types of trusts
■ the spouse or common-law partner, or former spouse or
common-law partner, of the settlor of the trust A trust is either a testamentary trust or an inter vivos trust.
Each trust has different tax rules. “Chart 1 – Types of
■ a child, grandchild, or great-grandchild of the settlor of Trusts” on page 9, describes different types of trusts and
the trust arrangements.
■ the spouse or common-law partner of a child,
grandchild, or great-grandchild of the settlor of the trust Testamentary Trust
A testamentary trust is a trust or estate that is generally
Principal residence – generally means any of the following:
created on and as result of the death of an individual,
■ a housing unit including a trust created under the terms of an individual’s
will or by court order in relation to the deceased
■ a leasehold interest in a housing unit
individual’s estate under provincial or territorial law.
■ a share of a co-operative housing corporation, if the share
Generally, this type of trust does not include a trust created
is acquired for the sole purpose of obtaining the right to
by a person other than a deceased individual, or a trust
live in a housing unit owned by that corporation
created after November 12, 1981, if any property was
For more information, see “Principal residence” on page 39. contributed to it other than by a deceased individual as a
consequence of the individual’s death. For rules about
Settlor – generally means the person who set up a trust by testamentary trusts created before November 13, 1981,
contributing property to the trust. In the case of a preferred call 1-800-959-8281.
beneficiary election, a settlor is restricted to a person who is
otherwise the settlor of the trust and has contributed the If the assets are not distributed to the beneficiaries
majority of property to the trust. according to the terms of the will, the testamentary trust
may become an inter vivos trust.
Spouse – this applies only to a person to whom you are
legally married. For tax years ending after December 20, 2002,
a testamentary trust may become an inter vivos trust if the
Testator – the deceased person who made and left a valid trust incurs a debt or other obligation to pay an amount to,
will. or guaranteed by, a beneficiary or any other person or
Trust – a binding obligation enforceable by law when partnership (any or all referred to as specified party),
undertaken. It may be created by one of the following: with whom any beneficiary of the trust does not deal
at arm’s length.
■ a person (either verbally or in writing)
■ a court order
■ a statute

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This does not apply for certain debts or other obligations, ■ owed to the beneficiary as a result of a payment on
including those: behalf of the trust for which property was transferred to
the specified party within 12 months of the payment and
■ incurred by the trust in satisfaction of a beneficiary’s
the beneficiary would have made the payment had they
right to enforce payment of an amount payable by the
been dealing with the trust at arm’s length
trust to the beneficiary or to receive any part of the
trust’s capital
Inter vivos trust
■ owed to the beneficiary as a result of services provided
An inter vivos trust is a trust that is not a
by the beneficiary for the trust
testamentary trust.

8 canada.ca/taxes
 Chart 1 – Types of Trusts

Type of trust General information

Graduated rate A graduated rate estate, of an individual at any time, is the estate that arose on and as a consequence of
estate (GRE) the individual’s death, if all of the following conditions are met:
■ that time is no more than 36 months after the death of the individual
■ the estate is at that time a testamentary trust
■ the individual’s social insurance number is provided in the estate’s T3 return of income for the tax
year that includes that time and for each of its earlier tax years that ended after 2015 (36 month
period after the death of the individual)
■ the estate designates itself as the graduated rate estate of the individual in its T3 return of income
■ no other estate designates itself as the graduated rate estate of that individual in a T3 return of
income for a tax year that ends after 2015
An estate can only be a “graduated rate estate” for up to 36 months following the death of an individual.
The estate will cease to be a graduated rate estate if it is still in existence at the end of the 36 month
period.

▲ A post-1971 spousal or common-law partner trust includes both a testamentary trust created
after 1971, and an inter vivos trust created after June 17, 1971. In either case, the living beneficiary
Spousal or spouse or common-law partner is entitled to receive all the income that may arise during the lifetime of the
common-law spouse or common-law partner. That spouse or common-law partner is the only person who can receive,
partner trust or get the use of, any income or capital of the trust during their lifetime.
A pre-1972 spousal trust includes both a testamentary trust created before 1972, and an inter vivos trust
created before June 18, 1971. In either case, the beneficiary spouse was entitled to receive all the income
during the spouse’s lifetime, and no other person received, or got the use of, any income or capital of the
trust. These conditions must be met for the period beginning on the day the trust was created, up to the
earliest of the following dates:
■ the day the beneficiary spouse dies
■ January 1, 1993
■ the day on which the definition of a pre-1972 spousal trust is applied

▲ This is a trust (other than a trust that is, or was at any time after 1999, a unit trust) that is one of the
following:
Personal trust ■ a graduated rate estate
■ a trust in which no beneficial interest was acquired for consideration payable directly or indirectly to:
(a) the trust
(b) any person or partnership that has made a contribution to the trust by way of transfer, assignment
or other disposition of property
For 2016 and subsequent tax years, only a graduated rate estate automatically qualifies as a personal
trust without regard to the circumstances in which beneficial interest in the trust has been acquired.

Alter ego trust This is a trust created after 1999 by a settlor who was 65 years of age or older at the time the trust was
created, for which the settlor is entitled to receive all the income that may arise during their lifetime, and is
the only person who can receive, or get the use of, any income or capital of the trust during the settlor’s
lifetime. A trust will not be considered an alter ego trust if it so elects in its T3 return for its first tax year.

Communal We consider a trust to exist when a congregation meets all of the following conditions:
organization ■ has members who live and work together
■ follows the practices and beliefs of, and operates according to the principles of, the religious
organization of which it is a part
■ does not permit its members to own property in their own right
■ requires that its members devote their working lives to the congregation’s activities
■ carries on one or more businesses directly, or owns all of the shares of the capital stock of a
corporation (except directors’ qualifying shares), or every interest in a trust or other person that
carries on the business to support or sustain its members or the members of another congregation
The communal organization has to pay tax as though it were an inter vivos trust. However, it can elect to
allocate its income to the beneficiaries. For more information, see Information Circular IC78-5R,
Communal Organizations.

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 Chart 1 – Types of Trusts

Type of trust General information

Deemed resident A trust is deemed resident in Canada where there is one of the following:
trust ■ a “resident contributor”
■ a “resident beneficiary” under the trust
A “resident contributor” to a trust at a particular time means a person that is, at that time, resident
in Canada and has at or before that time made a contribution to the trust.
A “resident beneficiary” under a trust at a particular time is a person (other than an “exempt person” or
“successor beneficiary”) that, at that time, is a beneficiary under the trust, is resident in Canada, and there
is a “connected contributor” to the trust.
A “connected contributor” is a person who made a contribution either while resident in Canada, within
60-months of moving to Canada, or within 60-months of leaving Canada.
For tax years that ended before February 11, 2014, individuals who had been resident in Canada for a
period of, (or periods the total of which is) 60 months or less were exempted from treatment as resident
contributors or connected contributors. This exemption also applies to the tax years of non-resident trusts
that end before 2015 if all of the following conditions are met:
■ no contributions were made to the trust after February 10, 2014 and before 2015
■ at any time that is after 2013 and before February 11, 2014, the 60-month exemption applied in
respect of the trust
These trusts are deemed resident for several purposes including:
■ filing income tax returns and paying income tax under Part I of the Act
■ withholding tax on amounts paid to non-residents under Part XIII
■ certain filing obligations relating to ownership of foreign property, money received from or given to
foreign entities
The trusts are NOT considered resident for calculating a Canadian’s liability when paying the trust
(i.e. when a resident taxpayer pays the deemed resident trust it is required to withhold Part XIII). They are
also not considered resident for the purpose of determining a Canadian resident’s (other than the trust)
foreign reporting requirements.
If you need help in determining whether the trust is a deemed resident of Canada, call one of the
telephone numbers listed in “Non-resident trusts and deemed resident trusts” on page 20.

Employee benefit Generally, this is any arrangement under which an employer makes contributions to a custodian, and
plan under which one or more payments will be made to, or for the benefit of, employees, former employees, or
persons related to them.
For more information, and for details on what we consider to be an employee benefit plan and how it is
taxed, see archived Interpretation Bulletin IT-502, Employee Benefit Plans and Employee Trusts, and its
Special Release.
Note: An employee benefit plan has to file a T3 return if the plan or trust has tax payable, has a taxable
capital gain, or has disposed of capital property.
Because the allocations are taxed as income from employment to the beneficiaries, report the allocations
on a T4 slip, not on a T3 slip. For more information, see Guide RC4120, Employers’ Guide – Filing the
T4 Slip and Summary.

Employee life This is a trust, established by one or more employers, that meets a number of conditions under
and health trust subsection 144.1(2) of the Act. The trust’s only purpose is the payment of designated employee benefits
(DEBs) for employees and certain related persons (certain limitations apply to the rights and benefits that
(ELHT) may be provided to key employees).
(established
after 2009) Employers can deduct contributions made to the trust, as long as they are for DEBs and meet the
conditions in subsection 144.1(4). Employee contributions are permitted, but are not deductible. However,
employee contributions may qualify for the medical expense tax credit, to the extent that they are made to
a private health services plan.
The trust can deduct amounts paid to employees or former employees for DEBs and can generally carry
non-capital losses back or forward three years. Any amount received from an ELHT must be included in
income, unless the amount was received as the payment of a DEB. Payments of DEBs to non-resident
employees or former employees will generally not be subject to tax under Part XIII.
For more information on ELHTs, designated employee benefits and key employees, see section 144.1.

10 canada.ca/taxes
 Chart 1 – Types of Trusts

Type of trust General information

Employee trust This is a trust. Generally, it is an arrangement established after 1979, under which an employer makes
payments to a trustee in trust for the sole benefit of the employees. The trustee has to elect to qualify the
arrangement as an employee trust on the trust’s first T3 return. The employer can deduct contributions to
the plan only if the trust has made this election and filed it no later than 90 days after the end of its first tax
year. To maintain its employee trust status, each year the trust has to allocate to its beneficiaries all
non-business income for that year, and employer contributions made in the year. Business income cannot
be allocated and is taxed in the trust.
For more information, see archived Interpretation Bulletin IT-502, Employee Benefit Plans and Employee
Trusts, and it’s Special Release.
Note: An employee trust has to file a T3 return if the plan or trust has tax payable, has a taxable capital
gain, or has disposed of capital property.
Because the allocations are taxed as income from employment to the beneficiaries, report the allocations
on a T4 slip, not on a T3 slip. For more information, see Guide RC4120, Employers’ Guide – Filing the
T4 Slip and Summary.

Environment A trust under paragraph 149(1)(z.1) of the Act. This is a trust that was created because of a requirement
Quality Act trust imposed by section 56 of the Environment Quality Act, R.S.Q., c. Q-2. The trust must meet all of the
following conditions:
■ the trust is resident in Canada
■ the only persons that are beneficially interested are one of the following:
(a) Her Majesty in right of Canada
(b) Her Majesty in right of a province
(c) a municipality (as defined in section 1 of that Act) that is exempt because of subsection 149(1)
from tax under Part 1 on all of its taxable income

Health and Health and welfare benefits for employees are sometimes provided through a trust arrangement under
welfare trust which the trustees receive the contributions from the employer(s), and in some cases from employees, to
provide such health and welfare benefits as have been agreed to between the employer and the
(HWT) employees. To qualify for treatment as a HWT, the funds of the trust cannot revert to the employer or be
used for any purpose other than providing health and welfare benefits for which the contributions are
made. In addition, the employer’s contributions to the fund must not exceed the amounts required to
provide these benefits. Further, to qualify for treatment as a HWT, the payments by the employer cannot
be made on a voluntary or gratuitous basis – they must be enforceable by the trustees should the
employer decide not to make the payments required. This arrangement is restricted to one or any
combination of the following:
■ a group sickness or accident insurance plan
■ a private health services plan
■ a group term life insurance policy
Starting in 2022, the CRA will no longer apply its administrative positions with respect to HWTs.
For more information, see “What’s new” at the beginning of this guide.

Hepatitis C trust These are inter vivos trusts under paragraph 81(1)(g.3) of the Act and are government funded trusts.
and Indian ■ established under:
residential (a) the 1986-1990 Hepatitis C Settlement Agreement
school trust
(b) the Pre-1986/Post-1990 Hepatitis C Settlement Agreement
(c) the Indian Residential Schools Settlement Agreement entered into by her Majesty in right of
Canada on May 8, 2006
As long as no contribution to the trust, other than contributions provided for under the Agreement, is made
before the end of a tax year of the trust, the trust’s income is generally exempt from income tax for that tax
year.

Insurance This is a related segregated fund of a life insurer for life insurance policies and is considered to be an
segregated fund inter vivos trust. The fund’s property and income are considered to be the property and income of the
trust, with the life insurer as the trustee.
trust
Note: You have to file a separate T3 return and financial statements for each fund. If all the beneficiaries
are fully registered plans, complete only the identification and certification areas of the T3 return and
enclose the financial statements. If the beneficiaries are both registered and non-registered plans, report
and allocate only the income that applies to the non-registered plans.

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 Chart 1 – Types of Trusts

Type of trust General information

Joint spousal or This is a trust created after 1999 by a settlor who was 65 years of age or older at the time the trust was
common-law created. The settlor and the settlor’s spouse or common-law partner are entitled to receive all the income
that may arise from the trust before the later of their deaths. They are the only persons who can receive,
partner trust or get the use of, any income or capital of the trust before the later of their deaths.

Lifetime benefit This is a trust that is at any particular time a lifetime benefit trust with respect to a taxpayer and the estate
trust of a deceased individual if both of the following conditions are met:
■ immediately before the death of the deceased individual, the taxpayer meets one of the following
conditions:
(a) was both a spouse or common-law partner of the deceased individual and mentally infirm
(b) was both a child or grandchild of the deceased individual and dependent of the deceased
individual for support because of mental infirmity
■ the trust is, at the particular time, a personal trust under which:
(a) no person other than the taxpayer may receive or otherwise obtain the use of, during the
taxpayer’s lifetime, any of the income or capital of the trust
(b) the trustees:
(i) are empowered to pay amounts from the trust to the taxpayer
(ii) are required in determining whether to pay, or not to pay, an amount to the taxpayer to
consider the needs of the taxpayer including, without limiting the generality of the foregoing,
the comfort, care and maintenance of the taxpayer

Master trust This is a trust. A trust can elect to be a master trust if during the entire time since its creation it met all of
the following conditions:
■ it was resident in Canada
■ its only undertaking was the investing of its funds
■ it never borrowed money except for a term of 90 days or less (for this purpose, the borrowing cannot
be part of a series of loans or other transactions and repayments)
■ it has never accepted deposits
■ each of its beneficiaries is a trust governed by a deferred profit sharing plan, a pooled registered
pension plan or a registered pension plan
Note: A master trust is exempt from Part I tax. A trust can elect to be a master trust by indicating this in a
letter filed with its T3 return for the tax year the trust elects to become a master trust. Once made, this
election cannot be revoked. However, the trust must continue to meet the conditions listed above to keep
its identity as a master trust. After the first T3 return is filed for the master trust, you do not have to file any
further T3 returns for this trust. If a future T3 return is filed, we will assume the trust no longer meets the
above conditions. The trust will not be considered a master trust and must file yearly T3 returns from then
on. If the trust is wound up, send us a letter to tell us the wind-up date.

Mutual fund trust This is a unit trust that resides in Canada. It also has to comply with the other conditions of the Act, as
outlined in section 132 and the conditions established by Income Tax Regulation 4801. For a mutual fund
trust that is a public trust, or public investment trust, there are certain reporting requirements these types
of trusts must meet. For more information, see below or go to canada.ca/cra-trust-types.
Public trust
A public trust is, at any time, a mutual fund trust of which its units are listed, at that time, on a designated
stock exchange in Canada.
Public investment trust
A public investment trust is, at any time, a trust that is a public trust, where all or substantially all of the fair
market value of the property is, at that time, attributable to the fair market value of property of the trust that
is:
■ units of public trusts
■ partnership interests in public partnerships
■ shares of the capital stock of public corporations
■ any combination of those properties

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 Chart 1 – Types of Trusts

Type of trust General information

Non-profit This is an organization (for example, club, society, or association) that is usually organized and operated
organization exclusively for social welfare, civic improvement, pleasure, recreation, or any other purpose except profit.
The organization will generally be exempt from tax if no part of its income is payable to, or available for,
the personal benefit of a proprietor, member, or shareholder. For more information, see archived
Interpretation Bulletin IT-496, Non-Profit Organizations.
If the main purpose of the organization is to provide services such as dining, recreational, or sporting
facilities to its members, we consider it to be a trust. In this case, the trust is taxable on its income from
property, and on any taxable capital gains from the disposition of any property that is not used to provide
those services. The trust is allowed a deduction of $2,000 when calculating its taxable income. Claim this
on line 54 of the T3 return.
For more information, see archived Interpretation Bulletin IT-83, Non-Profit Organizations – Taxation of
Income From Property.
Note: A non-profit organization may have to file Form T1044, Non-Profit Organization (NPO) Information
Return. For more information, see Guide T4117, Income Tax Guide to the Non-Profit Organization (NPO)
Information Return.

Nuclear Fuel A trust under paragraph 149(1)(z.2) of the Act. This is a trust that was created because of a requirement
Waste Act trust imposed by subsection 9(1) of the Nuclear Fuel Waste Act. The trust must meet all of the following
conditions:
■ the trust is resident in Canada
■ the only persons that are beneficially interested are one of the following:
(a) Her Majesty in right of Canada
(b) Her Majesty in right of a province
(c) a nuclear energy corporation (as defined in section 2 of that Act) all the shares of the capital
stock of which are owned by one or more persons described in clause (a) or (b)
(d) the waste management organization established under section 6 of that Act if all shares of its
capital stock are owned by one or more nuclear energy corporations described in clause (c)
(e) Atomic Energy of Canada Limited, being the company incorporated or acquired in accordance
with subsection 10(2) of the Atomic Energy Control Act

Pooled Pooled Registered Pension Plans must operate through an arrangement acceptable to the Minister. All
registered property held in connection with a PRPP is required to be held in trust by the administrator on behalf of
the plan members. As a result, a PRPP is generally treated as a trust for tax purposes, the administrator is
pension plans the trustee of that trust, the members are the beneficiaries, and the trust property is the property held in
(PRPP) connection with the plan. A pooled registered pension plan trust will be excluded for purposes of the
21 year deemed disposition rule and other specified measures. When certain criteria are met, a pooled
registered pension plan trust will be exempt from Part 1 tax.
For more information, go to canada.ca/taxes-pooled-registered-pension-plan.

Qualified A qualified disability trust for a tax year is a testamentary trust that arose on the death of a particular
disability trust individual that jointly elects (using Form T3QDT, Joint Election for a Trust to be a Qualified Disability
(QDT) Trust), with one or more beneficiaries under the trust, in its T3 return of income for the year to be a
qualified disability trust for the year. In addition, all of the following conditions have to be satisfied:
■ the election must include each electing beneficiary’s Social Insurance Number
■ each electing beneficiary must be named as a beneficiary by the particular individual in the
instrument under which the trust is created
■ each electing beneficiary must, for the beneficiary’s tax year in which the trust’s year-ends, be
eligible for the disability tax credit
■ no beneficiary who elects with the trust to be a qualified disability trust for the year can elect with any
other trust for the other trust to be a qualified disability trust for the other trust’s tax year that ends in
the beneficiary’s tax year
■ the trust must be factually resident in Canada (i.e., resident determined without regard to section 94
of the Act)
■ the trust is not subject to the recovery tax for the year
For a trust that was a qualified disability trust in a previous tax year, refer to “Line 11 – Federal recovery
tax” on page 56.

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 Chart 1 – Types of Trusts

Type of trust General information

Qualifying Generally, this is a trust resident in Canada or a province, or a corporation resident in Canada that is
environmental licensed or otherwise authorized under the laws of Canada or a province to carry on in Canada the
business of offering to the public its services as trustee, or that is not an excluded trust and maintained at
trust (QET) that time for the sole purpose of funding the reclamation of a qualifying site in Canada or in the province
that is, or may become, required to be maintained under the terms of a qualifying contract, or a qualifying
law, and that had been used primarily for, or for any combination of:
■ the operation of a mine
■ the extraction of clay, peat, sand, shale or aggregates (including dimension stone and gravel)
■ the deposit of waste
■ If the trust was created after 2011, the operation of a pipeline, as long as the other requirements
defined in subsection 211.6(1) of the Act are met
Under the definition, the trust is, or may become, required to be maintained under the terms of a contract
entered into with the federal or provincial Crown or if the trust was established after 2011, by an order of a
tribunal constituted under a federal or provincial law. Certain conditions exist that may exclude a trust from
being a QET. For more information, please see the definition of a QET in subsection 211.6 (1).

Real estate A trust is a REIT for a tax year, if it is resident in Canada throughout the year and meets a number of other
investment trust conditions, including all of the following:
(REIT) ■ at least 90% of the trust’s non-portfolio properties must be qualified REIT properties
■ at least 90% of the trust’s gross REIT revenue for the tax year must be derived from rent, from real
properties, interest, capital gains from dispositions of real properties which are capital properties,
dispositions of eligible resale properties, dividends and royalties
■ at least 75% of the trust’s gross REIT revenues for the tax year must be derived from rent from real
properties, interest from mortgages on real properties and capital gains from dispositions of real
properties which are capital properties

Registered An RDSP trust has to complete and file a T3 return if the trust has borrowed money and
disability subparagraph 146.4(5)(a)(i) or 146.4(5)(a)(ii) of the Act applies. If this does not apply and the trust carried
on a business or held non-qualified investments during the tax year, you have to complete a T3 return to
savings plan calculate the taxable income from the business or non-qualified investments, determined under subsection
(RDSP) trust 146.4(5). If the trust is reporting capital gains or losses, it has to report the full amount (that is, 100%) on
line 1 of the T3 return.

Registered If an RESP trust held non-qualified investments during the tax year, you have to complete and file a T3
education return to calculate the taxable income from non-qualified investments, determined under
subsection 146.1(5) of the Act. If the trust is reporting capital gains or losses, it has to report the full
savings plan amount (that is, 100%) on line 1 of the T3 return.
(RESP) trusts

Registered An RRSP, or RRIF trust has to complete and file a T3 return if the trust meets one of the following
retirement conditions:
savings plan ■ the trust has borrowed money and paragraph 146(4)(a) or 146.3(3)(a) of the Act applies
(RRSP), or ■ the RRIF trust received a gift of property and paragraph 146.3(3)(b) of the Act applies
Registered ■ the last annuitant has died and paragraph 146(4)(c) or subsection 146.3(3.1) of the Act applies. If
retirement this is the case, claim an amount on line 47 of the T3 return only if the allocated amounts were paid
income fund in accordance with paragraph 104(6)(a.2)
(RRIF) trusts
If the trust does not meet one of the above conditions and the trust held non-qualified investments during
the tax year, you have to complete a T3 return to calculate the taxable income from non-qualified
investments, determined under subsection 146(10.1) or 146.3(9). If the trust is reporting capital gains or
losses, it has to report the full amount (that is, 100%) on line 1 of the T3 return. If the trust does not meet
one of the above conditions and the trust carried on a business, you have to complete a T3 return to
calculate the taxable income of the trust from carrying on a business. Do not include the business income
earned from qualified investments for the trust.

Retirement This arrangement exists when an employer makes contributions for an employee’s retirement, termination
compensation of employment, or any significant change in services of employment.
arrangement For more information, see Guide T4041, Retirement Compensation Arrangements Guide.
(RCA) Note: If a trusteed arrangement is comprised of both an RCA and an employee benefit plan, you must file
a T3 return for the portion of the arrangement that is treated as an employee benefit plan. Form T3 RCA,
Retirement Compensation Arrangement (RCA) – Part XI.3 Tax Return, has to be filed for the RCA portion.

14 canada.ca/taxes
 Chart 1 – Types of Trusts

Type of trust General information

Salary deferral Generally, this is a plan or arrangement (whether funded or not) between an employer and an employee
arrangement or another person who has a right to receive salary or wages in a year after the services have been
performed.
(SDA)
For more information, see archived Interpretation Bulletin IT-529, Flexible Employee Benefit Programs.
Note: If a salary deferral arrangement is funded, we consider it a trust, and you may have to file a
T3 return. The deferred amount is deemed to be an employment benefit, so you report it on a T4 slip, not
on a T3 slip. The employee has to include the amount in income for the year the services are performed.
The employee also has to include any interest, or other amount earned by the deferred amount. For more
information, see Guide RC4120, Employers’ Guide – Filing the T4 Slip and Summary.

Specified This is a trust (other than a trust that is a real estate investment trust for the tax year or an entity that is an
investment excluded subsidiary entity) that meets all of the following conditions at any time during the tax year:
flow-through ■ the trust is resident in Canada
(SIFT) trust ■ investments in the trust are listed or traded on a stock exchange or other public market
■ the trust holds one or more non-portfolio properties
For more information, go to canada.ca/cra-sift-trust.

Specified trust This is a trust that is: an amateur athlete trust; an employee life and health trust; an employee trust; a
(for purposes of master trust; a trust governed by a deferred profit sharing plan, an employee benefit plan, an employee
profit sharing plan, a foreign retirement arrangement, a pooled registered pension plan; a registered
this guide only) disability savings plan; a registered education savings plan, a registered pension plan, a registered
retirement income fund, a registered retirement savings plan, or a registered supplementary
unemployment benefit plan; a tax-free savings account trust; a related segregated fund trust; a retirement
compensation arrangement trust; a trust whose direct beneficiaries are one of the above mentioned trusts;
a trust governed by an eligible funeral arrangement or a cemetery care trust; a communal organization;
and a trust where all or substantially all of the property is held for the purpose of providing benefits to
individuals from employment or former employment.

Tax-free savings A TFSA trust has to complete and file a T3 return if the trust meets one of the following conditions:
account (TFSA) ■ If a TFSA trust carried on a business or held non-qualified investments during the tax year, the trust
trust will be taxable to the extent of the income earned from that business or those investments (Type of
trust code 320 on the T3 Return). For more information, see “Line 23 – Non-qualified investments for
TFSA, RRSP, RRIF, RDSP, and RESP trusts, or disposition of interest in a partnership reported
under subsection 100(1.1) of the Act” on page 40.
■ When the last holder of a TFSA dies, and the trust still exists after the exempt period, it is deemed to
dispose of all its property at fair market value and immediately reacquire it at the same value on
January 1 following the end of the exempt period. The trust loses its TFSA status, becomes a taxable
inter vivos trust from that point on (Trust code 318 ) and is subject to the normal rules for inter vivos
trusts. Additionally, in its first year as a taxable inter vivos trust, the trust is taxable on any income
and gains earned but not distributed during the exempt period. For more information go to
canada.ca/tfsa.

Unit trust This is a trust for which the interest of each beneficiary can be described at any time by referring to units
of the trust. A unit trust must also meet one of the three conditions described in subsection 108(2) of the
Act.

Bare trust The term “bare trust” is not defined in the Act. A “trust” for the purposes of the Act is defined in subsection
104(1) of the Act. That subsection provides that, if the arrangement is one in which the trust can
reasonably be considered to act as agent for all the beneficiaries under the trust with respect to all
dealings with all of the trust’s property and the trust is not a trust described in paragraphs (a) to (e.1) of the
definition of “trust” in subsection 108(1) of the Act, the arrangement is deemed not to be a trust for the
purposes of the Act. These arrangements are generally known as “bare trusts”.
A trustee can reasonably be considered to act as agent for a beneficiary when the trustee has no
significant powers or responsibilities, the trustee can take no action without instructions from that
beneficiary and the trustee’s only function is to hold legal title to the property. In order for the trustee to be
considered as the agent for all the beneficiaries of a trust, it would generally be necessary for the trust to
consult and take instructions from each and every beneficiary with respect to all dealings with all of the
trust property.

Land settlement The term “land settlement trust” is not defined in the Act. Generally, a land settlement trust is a trust
trust created to hold the settlement funds paid for a First Nation’s land claim.

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Code number for the type of trust ■ code 325, for a Communal Organization trust
A trust is either a testamentary trust or an inter vivos trust. ■ code 326, for an Employee Benefit Plans trust
Enter the code number for the type of trust.
■ code 327, for an Insurance Segregated Fund-Fully
registered trust
Testamentary trusts:
■ code 900, for a testamentary trust that is not identified by ■ code 328, for an Insurance Segregated Fund-Partially
one of the other testamentary trust codes registered trust

■ code 901, for a Lifetime Benefit trust ■ code 329, for an Insurance Segregated
Fund-non-registered
■ code 903, for an estate that designated itself as
a graduated rate estate (applicable for tax years ending ■ code 330, for a Non-profit Organization-Subsection
after 2015) 149(5) trust

■ code 904, for a Qualified Disability trust (applicable for ■ code 331, for a Non-profit Organization trust-subsection
tax years ending after 2015 when Form T3QDT, Joint 149(1)(l)
Election for a Trust to be a Qualified Disability Trust is ■ code 332, for an Employee trust
submitted)
■ code 333, for a Blind/Revocable trust
■ code 905, for a Spousal or Common-Law partner trust
■ code 334, for a Personal trust
Inter vivos trusts: ■ code 335, for a Joint Spousal or Common-Law Partner
■ code 300, Other trust trust. If the last surviving beneficiary (either the settlor,
or the spouse or common law partner, as the case may
■ code 301, for a Registered Retirement Savings Plan be) died in the year; see the Note at the end of this listing.
(RRSP) trust liable for tax under Part I
■ code 336, for an Alter Ego trust. If the settlor died in the
■ code 302, for a Registered Retirement Income Fund year, see the Note at the end of this listing.
(RRIF) trust liable for tax under Part I
■ code 337, for a Master trust
■ code 303, for a Registered Disability Savings Plan (RDSP)
trust liable for tax under Part I ■ code 338, for a Specified Investment Flow-Through
(SIFT) trust
■ code 304, for a Real Estate Investment trust (REIT)
■ code 519, for a Pooled Registered Pension Plans (PRPP)
■ code 305, for a Health and Welfare trust (HWT)
Note
■ code 306, for a Salary Deferral Arrangement (SDA) If the trust was a trust identified as code 322, 335, or 336
■ code 307, for a Bare Trust and the trust is continued after the death of the last
surviving lifetime beneficiary (either the settlor, or the
■ code 311, for a Land Settlement Trust spouse or common-law partner, as the case may be), use
trust type code 300 (other trust) on all T3 returns filed for
■ code 314, for an Environment Quality Act trust described
a tax year ending after the date of death.
in paragraph 149(1)(z.1)
■ code 315, for a Nuclear Fuel Waste Act trust described Who should file ▲
in paragraph 149(1)(z.2)
You have to file a T3 return if income from the trust
■ code 316, for an Hepatitis C trust described in paragraph property is subject to tax, and in the year, the trust:
81(1)(g.3)
■ has tax payable
■ code 317, for an Indian Residential Schools trust
described in paragraph 81(1)(g.3) ■ is requested to file

■ code 318, for a former tax-free savings account (TFSA) ■ is resident in Canada and has either disposed of, or is
trust after the end of the exempt period deemed to have disposed of, a capital property or has a
taxable capital gain (for example, a principal residence,
■ code 319, for a Registered Education Savings Plans or shares)
(RESP) trust liable under Part I
■ is a non-resident throughout the year, and has a taxable
■ code 320, for a TFSA trust liable for tax under Part I capital gain (other than from an excluded disposition
■ code 321, for an Employee Life and Health trust (ELHT) described in subsection 150(5)) or has disposed of taxable
Canadian property (other than from an excluded
■ code 322, for a Spousal or Common-Law Partner trust. If disposition)
the spouse or common-law partner died in the year, see
the Note at the end of this listing ■ is a deemed resident trust

■ code 323, for a Unit trust ■ holds property that is subject to subsection 75(2) of
the Act
■ code 324, for a Mutual Fund trust

16 canada.ca/taxes
■ has provided a benefit of more than $100 to a beneficiary Note
for upkeep, maintenance, or taxes for property If a non-resident trust elects to file an income tax return
maintained for the beneficiary’s use (for more under section 216 of the Act, it does not need a trust
information, see “Line 22 – Upkeep, maintenance, and account number to file that return.
taxes of a property used or occupied by a beneficiary”
If the residency status of a trust changes, after having been
on page 29), or
assigned a trust account number, the trust will continue to
■ receives from the trust property any income, gain, or use the same trust account number.
profit that is allocated to one or more beneficiaries, and
If a trust, to which section 94 applies, is an electing trust
the trust has:
with filing obligation under both its resident portion trust
– total income from all sources of more than $500 and its non resident portion trust, these returns must be
filed separately using two distinct trust account numbers.
– income of more than $100 allocated to any single
beneficiary
Applying for a trust account number
– made a distribution of capital to one or more
A trustee, or a representative authorized by the trustee to
beneficiaries
do so, can apply for a trust account number. For information
– allocated any portion of the income to a non-resident about authorizing a representative for the trust, see “Giving
beneficiary or cancelling an authorization” on page 74.
To apply, you can use the CRA’s online trust account
Example registration service, or you can use Form T3APP, T3
A T3 return must be filed when a trust does not have tax Application for Trust Account Number.
payable, however the trust holds property that is subject to
subsection 75(2) and from which the trust received income, Online trust account registration service
gains or profits during the year. You can access the Trust Account Registration service on
these portals:
A T3 return must be filed when the trusts’ total income
from all sources is less than $500, however the trust made a ■ My Account, under “Related Services”
distribution of capital to one or more beneficiaries.
■ My Business Account, under "Open new account" in the
menu on the left-hand side
Tax tip
You may not have to file a T3 return if the estate is ■ Represent a Client, in the menu on the left-hand side
distributed immediately after the person dies, or if the
estate did not earn income before the distribution. Using Form T3APP
In these cases, you should give each beneficiary a Fill out and sign Form T3APP and send it to us with a copy
statement showing their share of the estate. of the signed will or trust document. You can either:
Use the “Submit documents” service in My Account or in
Rental income or timber royalty from Canada “Represent a Client” (for authorized representatives) or
Rental income from real property in Canada or a timber ■ Mail the documents to us, using the information on page
royalty on a Canadian timber resource property is subject 3 of Form T3APP
to a 25% withholding on the gross income under Part XIII,
unless the rate is reduced by a reciprocal tax treaty. You can find Form T3APP at canada.ca/cra-forms.
A non-resident may file a separate T3 Return pursuant to Note
an election under section 216 in respect of its net rental or Do not send Form T3APP with the trust’s T3 return.
timber royalty income.
Indicate “Section 216” on the top of the first page of the T3 Receiving your trust account number
Return. For more information, see IT393R2 – Election Re: If you use the Trust Account Registration service, you will
Tax on Rents and Timber Royalties Non-Residents. receive the trust account number immediately after you
complete the online registration process.
Trust account number If you apply using Form T3APP, we will mail the trust
A trust account number is an alphanumeric identifier account number to you.
starting with the letter “T” and followed by an eight digit
number. You must provide this identifier on every T3 Failure to provide the trust account number
return, trust-related information slip, and any After the CRA assigns the trust account number, you must
correspondence related to the trust. See “Failure to provide use it when filing the trust’s T3 return. Each failure to do so
the trust account number” below. will result in a $100 penalty.
In order to file a T3 return electronically, a Trust account
number needs to be requested prior to filing the return.

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What to file ▲ To enrol for direct deposit or to update a trust’s banking
information, the trustee or other authorized person can
Trusts listed in “Chart 1 – Types of Trusts” beginning on
complete Form T3-DD, Direct Deposit Request for T3, and
page 9 may have to file a T3 return, and any related
send it to the CRA. For more information, go to
schedules and statements, if they meet the requirements
canada.ca/cra-direct-deposit.
listed in “Line 23 – Federal foreign tax credit” on page 57.
The T3 return is filed as both an income tax return, which
calculates tax liability, and an information return, which When to file ▲
reports amounts allocated and designated to beneficiaries. The filing due date depends on the trust’s tax year-end.
When the trust files its first T3 return, send us a copy of the
will or trust document. For more information on other
documents available for electronic filing, see “Digital Tax year-end and fiscal period
services” on page 71 Graduated Rate Estate
You may also have to file the following, depending on the A graduated rate estate (GRE) can have a non-calendar tax
type of amounts paid or allocated by the trust: year (the period for which the accounts of the estate are
made up for purposes of assessment). A GRE will have a
■ If the trust allocated amounts to resident beneficiaries,
deemed tax year-end on the day on which the estate ceases
file the T3 Summary, Summary of Trust Income
to be a GRE, which will be no later than the day on which
Allocations and Designations and the related T3 slips.
the 36-month period after the death of the individual ends.
For more information, see “Chapter 4 – T3 slip and T3
Summary” on page 62. Later tax year-ends will generally be on a calendar year
basis. For example, where an estate is created in June 2019,
■ If the trust paid executor, liquidator, or trustee fees, or if
and is a GRE for 2019, 2020 and 2021, a deemed year-end
an employee benefit plan or an employee trust made
will occur in June 2022 on the 3-year anniversary of the
distributions other than a return of employee
individual’s date of death. The testamentary trust will also
contributions, file a T4 Summary, Summary of
have a tax year-end on December 31, 2022.
Remuneration Paid, and the related T4 slips, Statement of
Remuneration Paid. For more information, see
Guide RC4120, Employers’ Guide – Filing the T4 Slip All other trusts
and Summary. All other trusts are generally required to use a December 31
tax year-end. However, an exception is available for mutual
■ If the trust paid scholarships, fellowships, bursaries,
fund trusts that elect to have a December 15 year-end. A
prizes, or research grants to a resident of Canada, file
mutual fund trust that previously elected to have a
a T4A Summary, Summary of Pension, Retirement
December 15 year-end can revoke the election. For more
Annuity, and Other Income, and the related T4A slips,
information, call 1-800-959-8281.
Statement of Pension, Retirement, Annuity, and Other
Income. For more information, see Guide RC4157,
Deducting Income Tax on Pension and Other Income, Deemed year-end rules for all trusts
and Filing the T4A Slip and Summary. There are other situations in which a trust would be
subject to a deemed year-end that may affect its tax year-
■ If the trust paid or credited, or is considered to have
end. For example, if a trust ceased to be resident in Canada
paid or credited, amounts to a non-resident beneficiary,
on June 14, 2022, a deemed year-end would be triggered
file an NR4 Summary, Summary of Amounts Paid or
and the trust would be considered to have a tax year from
Credited to Non-Residents of Canada, and the related
January 1 to June 14, 2022. For more information,
NR4 slips, Statement of Amounts Paid or Credited to
call 1-800-959-8281.
Non-Residents of Canada. For more information, see
Guide T4061, NR4 – Non-Resident Tax Withholding, Tax tip
Remitting, and Reporting. For certain testamentary and inter vivos trusts, a deemed
taxation year-end will occur upon the death of a
■ If the trust paid fees to a non-resident of Canada for
particular beneficiary of the trust. For more information
services performed in Canada and the non-resident acts
on the due date for filing the T3 return and payment of
in the capacity of an executor in the course of a business,
tax for the deemed tax year-end, see Form T1055,
file a T4A-NR Summary, Fees, Commissions, or Other
Summary of Deemed Dispositions (2002 and later tax
Amounts Paid to Non-Residents for Services Rendered in
years) section on page 41.
Canada, and the related T4A-NR slips, Statement of Fees,
Commissions, or Other Amounts Paid to Non-Residents Filing dates
for Services Rendered in Canada. For more information,
In the same calendar year, you have to file the T3 return,
see Guide RC4445, T4A-NR – Payments to
the related T3 slips, NR4 slips, and T3 and NR4 Summaries
Non-Residents for Services Provided in Canada.
no later than 90 days after the trust’s tax year-end (see “Tax
year-end and fiscal period” on page 18). You should also
Form T3-DD, Direct Deposit Request pay any balance owing no later than 90 days after the
for T3 trust’s tax year-end.
We can deposit a trust’s T3 refund into the trust’s account Tax tip
at a financial institution in Canada. For Mutual Fund Trusts that filed an election to have a
tax year-end of December 15, where the pre-loss

18 canada.ca/taxes
 restriction event year-end is after December 15 in that Be ready to send this documentation to the Canada
calendar year, the NR4 return must be filed within Revenue Agency on request.
90 days after the end of that December 15 tax year. In
any other case, the NR4 return must be filed within T3 EFILE Exclusions
90 days after the end of the calendar year during which You cannot use the EFILE web service to file any T3 trust
the pre-loss restriction event year-ends. return types that are excluded from the T3 EFILE program:
If you do not have the information slips you need to ■ T3D, Deferred Profit Sharing Plan (DPSP) or Revoked
complete the return when it is due, estimate the income. If, DPSP
after you receive the slips, you find your estimate differs
from the actual amounts, send the slips and a letter to us, ■ T3P, Employees' Pension Plan
requesting an adjustment to the trust’s income. For more ■ T3PRP, Pooled Registered Pension Plan (PRPP)
information, see “Reassessments” on page 21.
■ T3RI, Registered Investment
If you mail the return first class, or if you use an equivalent
delivery service, we consider the date of the postmark on ■ T3GR, Group Income Tax and Information Return for
the envelope to be the day you filed the return. RRSP, RRIF, RESP or RDSP Trusts

When the due date falls on a Saturday, a Sunday, or a ■ T1061, Canadian Amateur Athletic Trust Group
public holiday recognized by the CRA, we consider your ■ Section 216 Returns
payment to be on time if we receive it on the next business
day. Your return is considered on time if we receive it or if In addition, you cannot file a Trust return electronically in
it is postmarked on or before the next business day. For any of the following situations, any related schedules, and
more information, go to canada.ca/when-file-t3-return. forms listed below:
For information on late-filing penalties and interest on ■ The return is an amended T3 trust return.
unpaid taxes, see “Penalties and interest” on page 20.
■ The return is for a tax year that ends before 2021.
Deadline for distributing T3 slips – You must send the
■ The trust does not have a trust account number.
T3 slips to the beneficiary’s last known address no later
than 90 days after the end of the trust’s tax year. If you ■ The trust is filing Form RC199, Voluntary Disclosures
have the information you need to complete the slips Program (VDP) Taxpayer Agreement, or the taxpayer is
before that deadline, we encourage you to send them to making a request under the Voluntary Disclosures
the beneficiaries as early as possible. Program.
■ Form T1273, Statement A - Harmonized AgriStability
Final T3 return
and AgriInvest Programs Information and Statement of
For a testamentary trust that is a graduated rate estate, Farming Activities for Individuals and Form T1163,
you have to file the final T3 return and pay any balance Statement A - AgriStability and AgriInvest Programs
owing no later than 90 days after the trust’s wind-up Information and Statement of Farming Activities for
(discontinuation) date. Enter the wind-up date on page 2 Individuals are excluded from T3 EFILE.
of the return.
■ T3 NB-SBI, T3 New Brunswick Small Business Investor
If you wind up a graduated rate estate, the tax year will Tax Credit.
end on the date of the final distribution of the assets.
■ T3SK CG, Saskatchewan Farm and Small Business
If you wind up an inter vivos trust or a testamentary trust Capital Gains Tax Credit (Trusts).
(other than a graduated rate estate), you have to file the
final T3 return and pay any balance owing no later ■ T3PFT, T3 Provincial or Territorial Foreign Tax Credit for
than 90 days after the trust’s tax year-end. Trusts.
In either case, you should get a clearance certificate before ■ Business income tax paid to more than 3 foreign
you distribute the trust property. For more information, countries on Form T3FFT, T3 Federal Foreign Tax Credits
see “Clearance certificate” on page 22. for Trusts.
■ Non-business income tax paid to more than 3 foreign
How to file the T3 return ▲ countries on Form T3FFT, T3 Federal Foreign Tax Credits
for Trusts.
Filing through EFILE
You have the option to file this return through EFILE. For ■ More than 12 Selected Financial Data (SFD) records.
more information about this filing method, go ■ A claim for Return of fuel charge proceeds to farmers tax
to canada.ca/efile. credit for a 2021 tax year.
Note ■ A claim for Yukon Business Carbon Price Rebate for a
You do not have to submit any other supporting 2021 tax year.
documentation when filing online. Keep all supporting
documentation used to prepare a return, such as, books,
records, forms, schedules, and receipts for six years from
the end of the last taxation year to which they relate.
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Filing on paper that you may hear a beep and experience a normal
Where you file the T3 return depends on whether the trust connection delay: 613-940-8495.
is resident in Canada, or is a non-resident trust or deemed
Penalties and interest ▲
resident trust. If the trust is resident in Canada, where you
file the T3 return depends on the trustee’s address. Penalties
We consider a trust to reside where its real business is Failure to file a T3 return
carried on, which is where the central management and
If you do not file the trust’s T3 return by the due date, we
control of the trust actually takes place. Usually, the
will charge a late filing penalty. The penalty is 5% of the
management and control of the trust rests with, and is
unpaid tax when the return was required to be filed plus
exercised by, the trustee, executor, liquidator,
1% of such unpaid tax for each full month that the T3
administrator, heir or other legal representative of the trust.
return is late, to a maximum of 12 months.
The residence of the trustee (or other representative of the
trust) does not always determine the residence of a trust. The late filing penalty will be higher if we issued a demand
See also “Residence of trust” on page 23. to file the T3 return, and we assessed a late filing penalty in
respect of a T3 return for any of the three preceding tax
If the trust resides in: years. In this case, the penalty may be 10% of the unpaid
tax when the return was required to be filed, plus 2% of
New Brunswick, Nova Scotia, Prince Edward Island,
such unpaid tax for each full month that the return is late,
Newfoundland and Labrador, or the remainder of the
to a maximum of 20 months.
provinces of Ontario and Quebec not listed under the
Winnipeg Tax Centre. The trust may be subject to an alternative penalty if it has
no unpaid taxes on the date it is required to be filed. This
Send the T3 return to:
alternative late-filing penalty is $25 a day for each day the
Sudbury Tax Centre return is late, from a minimum of $100 to a maximum of
T3 Trust Returns Program $2,500.
1050 Notre Dame Avenue
Sudbury ON P3A 6C2 Repeated failure to report income
If you failed to report an amount of income on your T3
If the trust resides in: return for 2022 and you also failed to report an amount of
income on your T3 return for 2019, 2020, or 2021, you may
Manitoba, Saskatchewan, Alberta, British Columbia,
have to pay a federal and provincial or territorial repeated
Northwest Territories, Yukon, Nunavut, Hamilton
failure to report income penalty. If you did not report an
(Ontario) and surrounding area, Kitchener-Waterloo
amount of income of $500 or more for a tax year, it will be
(Ontario) and surrounding area, Laval (Quebec) and
considered a failure to report income.
surrounding area, Montreal (Quebec) and surrounding
area, and Sherbrooke (Quebec) and surrounding area, The federal and provincial or territorial penalties are each
equal to the lesser of:
Send the T3 return to:
■ 10% of the amount you failed to report on your T3 return
Winnipeg Tax Centre
for 2022
T3 Trust Returns Program
PO Box 14003, Station Main ■ 50% of the difference between the understated tax
Winnipeg MB R3C 0N8 (and/or overstated credits) related to the amount you
failed to report and the amount of tax withheld related to
If you have questions about resident trusts,
the amount you failed to report
call 1-800-959-8281.
However, if you voluntarily tell us about an amount you
Non-resident trusts and deemed resident failed to report, we may waive these penalties. For more
trusts information, go to canada.ca/taxes voluntary disclosures.
Send the T3 return to:
False statements or omissions
Winnipeg Tax Centre You may have to pay a penalty if you knowingly or under
T3 Trust Returns Program circumstances amounting to gross negligence have made a
PO Box 14003, Station Main false statement or an omission on your 2022 T3 return.
Winnipeg MB R3C 0N8
The penalty is equal to the greater of:
Canada
■ $100
If you have questions about non-resident trusts or
deemed resident trusts, call one of the following numbers: ■ 50% of the understated tax and/or the overstated credits
related to the false statement or omission
■ Toll free within Canada and the continental USA:
1-800-959-8281. If you fail to provide any information on your T3 return,
you may also have to pay a penalty of $100 in respect of
■ From outside Canada and the continental USA – We
that failure.
accept collect calls by automated response. Please note

20 canada.ca/taxes
The trustee or tax preparer will also be subject to penalties To make a request, fill out Form RC4288, Request for
if, due to culpable conduct, they prepare, or participate in Taxpayer Relief – Cancel or Waive Penalties or Interest.
the preparation of, income tax or information returns, For more information about relief from penalties or interest
forms, or certificates on behalf of another person and make and how to submit your request, go to
false statements. canada.ca/taxpayer-relief.

Failure to distribute or/file trust-related information slip Payment options

as required T3 payments can be made online using CRA’s My Payment
■ If you distribute any trust related information slip to a service with a Visa debit, debit MasterCard or Interac
recipient late, the penalty is $25 a day for each day the Online card from a participating Canadian financial
slip is late, from a minimum of $100 to a maximum of institution. For more information, go to canada.ca/cra-my
$2,500, for each failure to comply with this requirement. -payment.
■ The minimum penalty for failing to file a trust related You can send us a cheque or money order payable to the
information slip by the due date is $100 and the Receiver General. Do not mail cash. To help us credit the
maximum penalty is $7,500. correct account, write the trust’s name and account number
on the front of your payment. Enter on line 71, the amount
For more information, go to canada.ca/penalty
of the payment.
-information-returns.
If you make a payment that your financial institution does
If you are convicted of not filing a T3 return or T3 slip as
not honour, including a cheque on which you put a stop
and when required, you are liable to a fine of $1,000 to
payment, we will charge you a fee. Generally, this fee will
$25,000, or to a fine and imprisonment for a period of up to
be $15 for each returned cheque, plus interest, if applicable.
12 months
If you or your representative does not have a bank account
Interest at a financial institution in Canada, you or your
representative can send your payment:
We pay compounded daily interest, at a prescribed rate, on
a tax refund starting on the latest of: ■ using a wire transfer
■ the 30th day after the balance is due for the tax year ■ an international money order drawn in Canadian dollars
■ the 30th day after the return for the tax year was filed ■ a bank draft in Canadian dollars drawn on a Canadian
bank
■ the day the overpayment arises
For more information, go to canada.ca/payments or contact
We charge interest on unpaid amounts and the total
your financial institution.
amount of penalties assessed. We calculate this interest,
compounded daily, at a prescribed rate starting on the day
after the unpaid amount was due until the date of its After you file ▲
payment.
Processing times
Cancel or waive penalties or interest We can usually assess a T3 return, that was filed by paper,
within 17 weeks.
The CRA administers legislation, commonly called the
taxpayer relief provisions, that gives the CRA discretion to
cancel or waive penalties or interest, in whole or in part,
Reassessments
when they result from circumstances beyond a taxpayer’s If you need to change a T3 return after you send it to us,
control. do not file another return for that tax year. Send us a
completed Form T3-ADJ, T3 Adjustment Request, or a letter
The CRA’s discretion to grant relief is limited to any period providing the details of the change. Indicate the trust’s
that ended within 10 calendar years before the year in account number, the tax year you want us to change, and
which the request is made. send us any supporting documents.
For penalties, the CRA will consider your request only if it You can submit Form T3-ADJ, T3 Adjustment Request
relates to a tax year or fiscal period ending in any of the online in My Account at canada.ca/my-cra-account by
10 calendar years before the year in which you make your using the “Submit documents” service. Your authorized
request. For example, your request made in 2022 must representative can access this online service through
relate to a penalty for a tax year or fiscal period ending Represent a Client at canada.ca/taxes-representatives.
in 2012 or later.
We can reassess your T3 return, make additional
For interest on a balance owing for any tax year or fiscal assessments, or assess tax, interest, or penalties within one
period, the CRA will consider only the amounts that of the following:
accrued during the 10 calendar years before the year in
which you make your request. For example, your request ■ three years (four years for mutual fund trusts) from the
made in 2022 must relate to interest that accrued in 2012 or date of your original notice of assessment or a notice that
later. no tax was payable for the tax year (this period is called
the “normal reassessment period”)

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■ six years (seven years for mutual fund trusts) from the extension within one year of your original time limit to
date of your original notice of assessment to allow or file an objection. You can apply by writing to the Chief of
change a carryback of certain deductions, such as a loss Appeals at your Appeals Intake Centre or by using
or an unused investment tax credit My Account at canada.ca/my-cra-account if you are an
individual, or My Business Account at canada.ca/my
Your request should be postmarked before the end of the
-cra-business-account if you are a business owner.
above periods for us to consider reassessing your return.
Include the reasons why you were prevented from filing
The taxpayer relief provisions permit the CRA to issue on time.
income tax refunds or reduce income tax payable for
■ In every other case, including the assessment of taxes in
individuals and graduated rate estate beyond the normal
respect of over-contributions to an RRSP or a TFSA, you
three-year period. The CRA’s discretion to grant relief is
have to file an objection within 90 days after the date of
limited to any period that ended within 10 years before the
the notice of assessment or notice of reassessment.
calendar year in which a request is submitted or an income
tax return is filed. You or your representative can choose to file your objection
by using one of these options:
Testamentary trusts can still benefit from these provisions
for tax years that ended on or before December 31, 2015. ■ making an online submission in “Represent a Client”
We usually base our initial assessment on the income you at canada.ca/taxes-representatives
report. Later, we may select the return for a more in-depth
■ sending a completed Form T400A, Notice of Objection –
review or audit. We can also reassess a return at any time if:
Income Tax Act, or a signed letter to the chief of appeals
■ You have made a misrepresentation because of neglect, at your appeals intake centre
carelessness, wilful default, or fraud in either filing the
For more information about objections and appeals to your
return or supplying information required by the Act.
income tax assessment or reassessment, go to canada.ca/cra
■ You file Form T2029, Waiver in respect of the normal -complaints-disputes.
reassessment period or extended reassessment period,
with your tax services office before the normal Elections
reassessment period expires. If you want to revoke a
The taxpayer relief provisions permit the CRA to accept
waiver you previously filed, file Form T652, Notice of
certain late, amended, or revoked income tax elections. This
Revocation of Waiver. The revocation will take effect
applies to both of the following elections that we discuss in
six months after you file Form T652.
this guide:
If requested by T3 Trusts Audit, you can submit the
■ 164(6) election by an estate (see page 35)
documentation online.
■ preferred beneficiary election (see page 49)
Tax Administration Rules A late, amended, or revoked election is subject to a penalty
For 2016 and subsequent tax years, the following of $100 for each complete month from the due date of the
administration rules, only available to GRE, extend the election to the date of the request. The maximum penalty
period: is $8,000.
■ during which the Canada Revenue Agency (CRA) may For more information about the taxpayer relief provisions,
refund an overpayment of tax go to canada.ca/taxpayer-relief.
■ during which, at the trust’s request, the CRA may
reassess or make determinations in respect of certain What records do you have to keep?
income tax liabilities You have to keep your books, records, and supporting
documents in case we need to verify the income or loss you
■ for objecting to a tax assessment
reported on the return. Generally, you must keep them for
■ for filing an agreement to transfer forgiven amounts at least six years from the tax-year-end to which they relate.
under the debt forgiveness rules However, you can request permission to dispose of them
before the end of this period.
How to register a formal dispute For more information, go to canada.ca/taxes-records, or
If you disagree with your assessment or reassessment, you see Information Circular IC78-10R, Books and Records
can make a formal objection. Retention/Destruction.
Filing an objection is the first step in the formal process of
resolving a dispute. The time limit for filing an objection is Clearance certificate
as follows: You can distribute property without a clearance certificate,
as long as you keep sufficient property in the trust to pay
■ If you are an individual (other than a trust), or filing for a
any liability to us. However, by getting a clearance
graduated rate estate, the time limit for filing an objection
certificate, you will avoid being personally liable for unpaid
is either one year after the due date for the return or
taxes, interest, and penalties.
90 days after the date of the notice of assessment or
notice of reassessment, whichever is later. If you did not
file your objection on time, you can apply for a time

22 canada.ca/taxes
We cannot issue a clearance certificate until you have done The settlement lands and their numbers are as follows:
both of the following:
British Columbia:
■ filed all the required returns and we have assessed them Nisga’a 09001
■ paid or secured all amounts owing Yukon:
Carcross/Tagish 11001
To ask for a clearance certificate, complete Form TX19,
Champagne and Aishihik 11002
Asking for a Clearance Certificate, and send it to the
Assistant Director, Audit Division, at your tax services Kluane 11003
office. Do not send Form TX19 until you have received a Kwanlin Dun 11004
notice of assessment for each return. Little Salmon/Carmacks 11006
For more information, see Information Circular IC82-6R, Nacho Nyak Dun 11007
Clearance Certificate. Selkirk 11009
Ta’an Kwäch’än 11010
Chapter 2 – Completing the T3 Teslin Tlingit 11011
return Tr’ondëk Hwëch’in 11012
Vuntut Gwitchin 11013
The T3 return is a five-page form with related schedules.
The following information will help you to complete the Northwest Territories:
return. Délînê Got’înê 10015
Tlicho 10008
Step 1 – Identification and other Newfoundland and Labrador:
Nunatsiavut Government 00010
required information ▲
When you enter this information on the return, we will
Complete all items on page 1 of the T3 return. The
transfer part of any tax payable to the government of the
assessment of the return may be delayed if you do not
Aboriginal settlement where the trust resides.
provide all the information.
Date of residency – Provide the date the trust became a
Trust account number – If we have assigned an account
resident of Canada or ceased to be a resident of Canada
number to the trust, enter it in this space. Include this
during the tax year, if applicable.
number on all correspondence related to the trust. If this
is the first return for the trust, we will issue an account Deemed resident trust – Indicate if the trust is a deemed
number, which will appear on the notice of assessment. resident trust and provide the name of any other country
in which the trust is considered to be resident. See the
Name of trust – Use the same name on all returns and
definition of a deemed resident trust in “Chart 1 – Types of
correspondence for the trust. The name of the trust will be
Trusts” on page 10.
modified to meet our requirements if it is longer than
60 characters. Type of trust – It is important that you complete this
section correctly because we use this information to
Residence of trust – A trust resides where its real business
determine the correct rate of tax. To identify the correct
is carried on, which is where the central management and
type of trust, see “Chart 1 – Types of Trusts” beginning on
control of the trust actually takes place. For information
page 9 and “Code number for the type of trust” on page 16.
about the residence of a trust or estate, see Income Tax
This information is mandatory. If this information is not
Folio S6-F1-C1, Residence of a Trust or Estate.
entered, the process of the T3 return may be delayed.
Trustee Information – Enter the full name of the trustee. If
Note
the trust has more than one trustee, choose one trustee to be
If you enter inter vivos code 300, for other trust, you
the CRA's primary contact. The trustee can be an individual
must specify the type of trust on the “Other inter vivos
or a non-individual. Choose only one of the two options
trust (specify)” line.
and fill in the required information about the trustee. If the
trustee is a non-individual then enter the full name of the Date of death (if the trust is a testamentary trust) or Date
contact person. trust was created (if the trust is an inter vivos trust) –
Provide this information on each return.
Mailing address – We may modify part of your address
to meet Canada Post’s requirements. Therefore, the address Social Insurance Number of the deceased – If the trust is a
on any cheques or correspondence we send you may be testamentary trust, enter the Social Insurance Number of
different from the one you indicate on the trust’s return. the deceased. The Social Insurance Number of the deceased
If you include the name and mailing address of a contact individual is mandatory for graduated rate estates.
person, we will send any cheques or correspondence for
the trust in care of that person. Non-profit organization – If the non-profit organization
is incorporated, enter the business number and program
Designated Aboriginal settlement lands – If the trust account.
resides on designated Aboriginal settlement lands, answer
yes, and enter the name and settlement number in the
spaces provided.
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Reporting foreign income and property ■ Form T1141, Information Return in Respect of
If the trust is resident in Canada or deemed to be resident Contributions to Non-Resident Trusts, Arrangements or
in Canada, you have to report its income from all sources, Entities
both inside and outside Canada. ■ Form T1142, Information Return in Respect of Distributions
If a resident trust or a deemed resident trust conducts from and Indebtedness to a Non-Resident Trust
business with a foreign affiliate, or owns specified foreign You may be able to claim a foreign tax credit when you
property in excess of CAN$100,000, you may have to file calculate your federal, provincial or territorial taxes. For
special returns. For more information, call 1-800-959-8281. more information, see Form T3FFT, T3 Federal Foreign Tax
Specified foreign property includes all of the following: Credits, and Form T3 PFT, T3 Provincial or Territorial
Foreign Tax Credit.
■ funds or intangible property (patents, copyrights, etc.)
situated, deposited or held outside Canada Other required information
■ tangible property situated outside Canada Answer all the questions on page 2. The following
information will help you answer some of the questions.
■ a share of the capital stock of a non-resident corporation
held by the taxpayer or by an agent on behalf of the Question 1 – If the trust is not a trust to which section 94
taxpayer applies, do not answer this question.
■ an interest in a non-resident trust that was acquired for Where a deemed resident trust has received property from
consideration, other than an interest in a non-resident multiple contributors, it may file an election to have certain
trust that is a foreign affiliate for the purposes of property that was not contributed to the trust by the
section 233.4 of the Act resident contributors and/or, where there is a resident
beneficiary, the connected contributors, be part of a
■ shares of corporations resident in Canada held by you for
separate trust that is not subject to section 94 (the
you outside Canada
non-resident portion trust). This election is non-revocable.
■ an interest in a partnership that holds a specified foreign
If the trust is an electing trust, indicate what year the trust
property unless the partnership is required to file
became an electing trust. For the year indicated, include a
Form T1135, Foreign Income Verification Statement
schedule showing all of the trust’s assets and specifying
■ an interest in, or right with respect to, an entity that is a allocation of assets between the resident portion trust and
non-resident the non-resident portion trust. Include schedules for
subsequent years only if changes occur.
■ a property that is convertible into, exchangeable for, or
confers a right to acquire a property that is specified CRA considers the electing trust and its non-resident
foreign property portion trust to be two separate trusts. If the non-resident
portion trust has any Canadian filing obligations under
■ a debt owed by a non-resident, including government
Part I or Part XIII as a non-resident trust, it must report
and corporate bonds, debentures, mortgages, and notes
those amounts as a separate trust under a separate trust
receivable
number from the deemed resident trust.
■ an interest in a foreign insurance policy
Question 2 – The terms of the will, trust document, or court
■ precious metals, gold certificates, and futures contracts order determine the requirement to allocate income.
held outside Canada The trust may be required to pay out its income to a
beneficiary. In this case, the income cannot be retained and
Specified foreign property does not include any of the taxed in the trust, unless the trust has made a designation
following: under subsections 104(13.1) or 104(13.2). For more
■ a property used or held exclusively in carrying on an information, see “Income to be taxed in the trust” on page 48.
active business Question 3 – If you answer yes, send us a statement giving
■ a share of the capital stock or indebtedness of a foreign all required information. For more information, see
affiliate “Distribution of property to beneficiaries” on page 34.

■ an interest in a trust described in paragraph (a) or (b) of Question 4 – If you answer yes, send us a statement giving
the definition of “exempt trust” in subsection 233.2(1) all required information only if the trust is a personal trust,
spousal or common law partner trust, joint spousal or
■ a personal-use property as defined in section 54 common law partner trust, or alter ego trust.
■ an interest in, or a right to acquire, any of the Question 5 – This question relates to spousal and similar
above-noted excluded foreign property trusts under subsection 104(13.4) and for purposes of this
You can also find specific information on the following question, a lifetime beneficiary under the trust is:
forms: ■ the last surviving beneficiary (either the settlor, or the
■ Form T1134, Information Return Relating to Controlled spouse or common-law partner, as the case may be) of an
and Not-Controlled Foreign Affiliates alter ego trust, a joint spousal or common-law partner
trust
■ Form T1135, Foreign Income Verification Statement

24 canada.ca/taxes
■ an individual (other than a trust) who transferred For more information, see:
property in circumstances described in
■ Guide T4037, Capital Gains
subparagraph 73(1.02(b)(ii) or subsection 107.4(1)
■ Guide T4002, Self-employed Business, Professional,
Question 6 – For a discussion as to the meaning of the term
Commission, Farming, and Fishing Income
“at arm’s length”, see Folio S1-F5-C1 – Related persons and
dealing at arm’s length.
Line 2 – Pension income ▲
Question 7 – If you answer yes, provide the date and send
Enter amounts that the trust received from any of the
us a statement showing the changes. For information on the
following:
disposition of an income interest in a trust, see Income Tax
Folio S6-F2-C1, Disposition of an Income Interest in a Trust. ■ registered pension plans
Question 8 – A yes response to this question only applies to ■ retirement compensation arrangements
personal trusts.
■ deferred profit sharing plans
Question 9 – “Contribution of property” is defined on
page 6. ■ superannuation plans

Question 10 – A yes response to this question only applies ■ foreign retirement arrangements
to a mutual fund trust. When an amount is considered to have been distributed to
Question 11 – If a trust used International Financial an estate from a foreign retirement arrangement according
Reporting Standards (IFRS) when it prepared its financial to the laws of the country where the arrangement was
statements, answer yes. established, the payment is also deemed received by the
estate for tax purposes in Canada. In this case, you must
IFRS is the collection of financial reporting standards include the amount, in Canadian funds, on line 2.
developed by the International Accounting Standards
Board (IASB). For more information, go to Line 3 –Total of actual amount of dividends
canada.ca/international-financial-reporting-standards-ifrs.
from taxable Canadian corporations ▲
Question 12 – If you answer yes, provide the date of the Enter the total of the actual amount of dividends received
loss restriction event. For more information, see “Loss from taxable Canadian corporations from line 3 of
trading – Rules for trusts” on page 30. Schedule 8. On line 3A, enter the actual amount of
dividends other than eligible dividends from line 1 of
Step 2 – Calculating total income: Schedule 8. Send us all information slips received. For more
information, see “Lines 1 to 3 – Dividends from taxable
Lines 1 to 12 Canadian corporations” on page 43.
Line 1 – Taxable capital gains
Calculate the taxable capital gains and allowable capital Line 4 – Foreign investment income ▲
losses of the trust on Schedule 1. Enter all interest and other investment income from foreign
If the amount on line 24 of Schedule 1 is a taxable capital sources from line 6 of Schedule 8. For more information, see
gain, enter it on line 1. the tax tip below and “Lines 4 to 6 – Foreign investment
income” on page 44.
If the amount on line 24 of Schedule 1 is a net capital loss,
do not enter it on line 1. You cannot deduct the net capital Line 5 – Other investment income ▲
loss from other income of the trust in the year, or allocate it
to the beneficiaries (except as described under “Exceptions Enter the amount from line 12 of Schedule 8. Include all
and limits to income allocations” on page 47). You can only interest and investment income from Canadian sources
use it to reduce the trust’s taxable capital gains of other except dividends from taxable Canadian corporations
years. For more information, see “Line 34 – Net capital reported on line 3. Send us all information slips received.
losses of other years” on page 31. For more information, see “Lines 7 to 12 – Other investment
income” on page 44.
Tax tip
In the first tax year of a GRE, the legal representative can Tax tip
elect to apply any net capital loss against income on the In the first year of a testamentary trust, any interest
deceased’s final return. For more information, see income that has accrued to the person’s date of death is
“Graduated rate estate elections (losses)” on page 34. reported on the deceased’s final T1 return. Any interest
income accrued after the person’s date of death is
If a trust sells capital property that is qualified farm or reported on the T3 return.
fishing property, or qualified small business corporation
shares and realizes a gain, the gain may qualify for the
capital gains deduction to be claimed by a beneficiary of the
Thin capitalization – Rules for trusts
trust. For more information, see “Line 921 – Taxable capital The scope of the application of the thin capitalization rules
gains” on page 51. will be extended to:
■ Canadian-resident trusts

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■ non-resident corporations and trusts that operate for non-resident corporations and trusts will differ from the
in Canada rules for Canadian-resident corporations in certain respects.
For example, a debt-to-asset ratio of 3-to-5 will be used,
These measures will also apply where a Canadian-resident
which parallels the 1.5-to-1 debt-to-equity ratio used for
trust or a non-resident trust is a member of a partnership.
Canadian-resident corporations.

Canadian resident trusts A loan that is used in a Canadian branch of a non-resident

corporation or trust will be an outstanding debt to a
A trust’s “equity” for the purposes of the thin capitalization
specified non-resident for thin capitalization purposes if it
rules will generally consist of contributions to the trust
is a loan from a non-resident who does not deal at arm’s
from specified non-residents plus the tax-paid earnings of
length with the non-resident corporation or trust.
the trust, less any capital distributions from the trust to
specified non-residents. The permitted 1.5-to-1 A non-resident corporation or trust that earns rental income
debt-to-equity ratio will remain unchanged. from certain Canadian properties may elect to be taxed on
its net income under Part I rather than being subject to
Trust beneficiaries will be used in place of shareholders for
non-resident withholding tax under Part XIII on its gross
the purpose of determining whether a person is a specified
rental income. The election allows the non-resident to
non-resident in respect of the trust and, therefore, whether
compute its taxable income as if it were a resident of
a debt owing to that person is included in the trust’s
Canada, with such modifications to the tax rules as the
outstanding debt to specified non-residents. The current
circumstances require. Where an election is made, the thin
rules dealing with rights to acquire shares in determining
capitalization rules for non-resident corporations and
who is a specified shareholder will be modified to address
trusts, rather than those for Canadian residents, will apply
discretionary powers.
in computing the non-resident’s Part I tax liability.
Where interest expense of a trust is not deductible as a
The thin capitalization rules apply to partnerships in which
result of the application of the thin capitalization rules, the
a non-resident corporation or trust is a member. Any
trust will be entitled to designate the non-deductible
income inclusion for a non-resident partner that arises as a
interest as a payment of income of the trust to
consequence of the application of the thin capitalization
a non-resident beneficiary (i.e., the recipient of the
rules is deemed to have the same character as the income
non-deductible interest). In such a case, the trust will be
against which the partnership’s interest deduction is
able to deduct the designated payment in computing its
applied.
income, but the designated payment will be subject to
non-resident withholding tax under Part XIII of the Act and This measure applies to tax years that begin after 2013 and
potentially tax under Part XII.2, depending on the character applies with respect to existing as well as new borrowings.
of the income earned by the trust.
The thin capitalization rules apply to partnerships in which Lines 6, 7, and 8 – Business, farming or
a Canadian resident trust is a member. As with debt owed fishing, and rental income
directly by the trust, where these rules result in an amount Enter on the appropriate lines, the trust’s gross and net
being included in computing the income of a trust, the trust income or loss from business, farming, fishing, and rentals.
is entitled to designate the included amount as having been If the amount is a loss, report it in brackets. If the trust is a
paid to a non-resident beneficiary as income of the trust. member of a partnership, enter the partnership’s total gross
Since some trusts may not have complete historical income and the trust’s share of the partnership’s net
information, any trust that exists on March 21, 2013 are able income or loss. Send us the appropriate forms or
to elect to determine the amount of its equity for thin statements.
capitalization purposes as at March 21, 2013 based on the If a trust (other than a graduated rate estate) operates a
fair market value of its assets less the amount of its business with a tax year-end other than December 31,
liabilities. Each beneficiary of the trust would then be special rules apply for calculating income. For more
considered to have made a contribution to the trust equal to information, see Guide RC4015, Reconciliation of Business
the beneficiary’s share (determined by reference to the Income for Tax Purposes, to calculate the income to report.
relative fair market value of their beneficial interest in the
trust) of this deemed trust equity. You have to follow certain rules when reporting business,
farming, fishing, and rental income. The following
Contributions to the trust, tax-paid earnings of the trust and publications contain more information and the forms you
distributions from the trust on or after March 21, 2013 may need to calculate the trust’s income:
would then increase or decrease (as appropriate) trust
equity for thin capitalization purposes. ■ Guide T4002, Self-employed Business, Professional,
Commission, Farming, and Fishing Income (Form T2125,
This measure applies to tax years that begin after 2013 and Statement of Business or Professional Activities,
applies with respect to existing as well as new borrowings. Form T2042, Statement of Farming Activities, and
Form T2121, Statement of Fishing Activities).
Non-resident trusts ■ Guide T4036, Rental Income (Form T776, Statement of
Since a Canadian branch is not a separate person from the Real Estate Rentals).
non-resident corporation or trust, the branch does not have
shareholders or equity for purposes of the thin
capitalization rules. Therefore, the thin capitalization rules

26 canada.ca/taxes
If the trust is a member of the AgriInvest Fund 2, the beneficiary spouse or common-law partner was still
call 1-866-367-8506 to find out which form you should use alive
to report farming income.
■ amounts received by a communal organization
Line 9 – AgriInvest Fund 2 payments Use the space below line 9 to show any of the amounts on
that line relating to payments received by the beneficiary
Use the calculation in this section to report all amounts
spouse or common-law partner while they were, or are still
received, and those deemed to have been received by the
alive, or by a communal organization.
trust out of its AgriInvest Fund 2. This fund is the portion
of a farm producer’s net income stabilization account that For more information, see Guide T4002, Self-employed
comes from third-party sources, such as interest, bonuses, Business, Professional, Commission, Farming, and Fishing
and government contributions. Income.
The trust should receive an AGR-1 slip, Statement of
Farm-Support Payments, (AgriInvest Fund 2 amounts are Line 10 – Deemed dispositions income or
reported in Box 18) for all farm support-programs from losses
which it received payments of more than $100. These Enter the trust’s total income or losses resulting from
include programs administered by the federal, provincial, deemed dispositions from line 42 of Form T1055, Summary
territorial, and municipal governments, and producer of Deemed Dispositions (2002 and later tax years). For more
associations. Participants in the Agri-Quebec program must information, see “Deemed disposition” on page 41.
also include in income, any amounts withdrawn from their
Agri-Quebec Fonds 2. The trust should receive an RL-21
slip, Farm Support Payments (Agri-Quebec Fonds 2
Line 11 – Other income ▲
amounts are reported in Box D). Enter the total income the trust received in the tax year
that is not included elsewhere on the T3 return or
Note schedules, such as:
In this Guide and the T3 return, any reference to
AgriInvest Fund 2 is a reference to AgriInvest Fund 2 ■ royalties (do not include Crown royalties in income)
and includes Agri-Quebec Fonds 2. ■ commissions
An AgriInvest Fund 2 amount can be transferred to a ■ death benefits under the Canada Pension Plan (CPP) or
testamentary post-1971 spousal or common-law partner Quebec Pension Plan (QPP)
trust when the settlor dies. If the beneficiary spouse or
common-law partner dies, the trustee has to report a ■ retiring allowances, unless this amount is reported by a
deemed payment on the day the beneficiary spouse or beneficiary, or reported in the retired person’s income for
common-law partner dies. The deemed payment is equal the year of death as a right or thing (for more
to the fund’s balance at the end of the day of death. The information, see archived Interpretation Bulletin IT-337,
rules related to the death of a beneficiary of a spousal or Retiring Allowances)
similar trust have been amended in 2016. For more
■ certain employment-related income (for more
information, see “Deemed disposition” on page 41.
information, see Guide T4011, Preparing Returns for
The trust has to report on line 9, the amount, if any, Deceased Persons)
determined by the following calculation:
■ federal, provincial, or territorial government COVID-19
A – (B – C) assistance, such as the Canada Emergency Wage Subsidy
(CEWS) if the trust was qualified as an eligible employer
where:
A = the amount paid in the year out of the program (or
deemed to have been paid out of the AgriInvest Fund 2, Death benefit – Other than CPP or QPP
such as on the death of the beneficiary spouse or A death benefit is an amount for a deceased person’s
common-law partner) employment service. This amount is shown in box 106 of
B = the total of all amounts previously deemed to have been a T4A slip. If a death benefit is to be taxed in the trust
paid out of the AgriInvest Fund 2 to the trust, or to the according to the provisions of the trust document, you may
beneficiary spouse or common-law partner, or out of be able to exclude up to $10,000 of the amount from the
another person’s AgriInvest Fund 2 on being transferred trust’s income.
to the trust
C = the total of all amounts previously applied to reduce If no one other than a trust received a death benefit, report
income out of the AgriInvest Fund 2 the amount that is more than $10,000. Even if the trust did
not receive all of the death benefits in one year, the total
Make separate calculations for each amount either paid or tax-free amount for all years cannot exceed $10,000. To find
deemed paid. out what to report if anyone else received a death benefit
for the same person, see archived Interpretation
AgriInvest Fund 2 payments are taxable in the trust. They Bulletin IT-508, Death Benefits.
cannot be allocated to beneficiaries, except for:
Send us a copy of the T4A slip, or a statement from the
■ amounts that relate to payments received by a deceased person’s employer that identifies the payment as
testamentary spousal or common-law partner trust while a death benefit.

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Registered retirement savings plan (RRSP) performed in Canada and the non-resident acts in the
A trust may be entitled to income earned by an RRSP after capacity of an executor in the course of a business, complete
the death of the only or last annuitant. Usually, this income a T4A-NR slip.
is shown on a T5 or T4RSP slip issued to the estate. Include
For more information, see Guide RC4445, T4A NR
this amount on line 11 of the T3 return. Generally, amounts
– Payments to Non Residents for Services Provided in
deemed received on death or as a refund of premiums
Canada. Otherwise, the fee for acting as executor is income
should not be included.
from an office. If the fees paid are $500 or more, you have to
For more information on taxable benefits from matured prepare a T4 slip for that individual. The individual reports
and unmatured RRSPs, see Guide T4040, RRSPs and Other these amounts as income from an office, even if they do not
Registered Plans for Retirement, Guide T4011, Preparing receive a T4 slip. For more information, see Guide RC4120,
Returns for Deceased Persons, and archived Interpretation Employers’ Guide – Filing the T4 Slip and Summary.
Bulletin IT-500, Registered Retirement Savings Plans –
Death of an Annuitant. Line 18 – Allowable business investment
losses (ABIL)
Step 3 – Calculating net income: If the trust had a business investment loss, you can deduct
Lines 13 to 31 a part of that loss from income. We call the deductible
portion an ABIL. It results from the actual or deemed
Line 14 – Carrying charges and interest disposition of certain capital properties. This can happen if
expenses ▲ the trust has disposed of, or is deemed to dispose of, one of
Enter the total carrying charges from line 17 of Schedule 8. the following to a person with whom it deals at arm’s
For more information, see “Lines 13 to 17 – Carrying length:
charges and interest expenses” on page 44. ■ a share or debt of a small business corporation

Lines 15 to 17 – Trustee fees ■ a bad debt owed to it by a small business corporation

Trustee, executor, and liquidator fees include: For more information, see Guide T4037, Capital Gains.
■ fees paid for certain investment advice (for more You can deduct the ABIL from the trust’s other sources of
information, see archived Interpretation Bulletin IT-238, income for the year. If the ABIL is more than the other
Fees Paid to Investment Counsel) sources of income for the year, the difference is a
non-capital loss for the year. For more information,
■ fees incurred to gain or produce business or property see “Line 33 – Non-capital losses of other years” on page 30.
income (deducted when you calculate the trust’s
business or property income) If you cannot deduct the ABIL as a non-capital loss within
the allowed time frame, the unapplied part becomes a net
■ fees for administering the trust or looking after real capital loss in the 11th year. You can then use it to reduce
property (for example, a residence) used by a lifetime the trust’s taxable capital gains in the 11th year or any
beneficiary of a testamentary trust (because these fees following year.
are not incurred to earn business or property income,
you cannot deduct them from the income of the trust) Reduction in business investment loss – If the trust
designated part or all of its eligible taxable capital gains for
Whether or not these fees are deductible by the trust, they the purpose of the capital gains deduction to a beneficiary
are still income to the recipient. For this reason, you have to in a previous year, you have to reduce the business
include the total fees paid in the year on line 15. investment loss for the current year.
On line 16, enter the fees that were not incurred to earn Use the chart on the next page to calculate the reduction in
income or that were already deducted elsewhere on business investment loss. If the trust had more than one
the T3 return. business investment loss in the year, use this chart to
Trustee, executor, or liquidator fees paid to a person who calculate the total reduction.
acts in the capacity of an executor in the course of a For more information, see Income Tax Folio S4-F8-C1,
business are part of that individual’s business income. Business Investment Losses.
You must report these amounts on a T4A slip. If the trust
paid fees to a non-resident of Canada for services

28 canada.ca/taxes
 Allowable Business Investment Loss and Reduction
You have to adjust the amount of eligible taxable capital gains on lines 1 to 7, because they were included in income at different rates in
previous years.
Total eligible taxable capital gains designated by the trust in 1985, 1986, and 1987 .................. ×2 = 1
Total eligible taxable capital gains designated by the trust in 1988 and 1989;
do not include eligible capital property on this line .................................................................... × 3/2 = + 2
Total deemed taxable capital gains from eligible capital property designated
by the trust in 1988 and 1989 ..................................................................................................... × 4/3 = + 3
Total eligible taxable capital gains designated by the trust in years after 1989
and before 2000 ......................................................................................................................... × 4/3 = + 4
Total eligible taxable capital gains designated by the trust in 2000 (see Note) ........................... × _____ = + 5
Total eligible taxable capital gains designated by the trust in 2001 (see Note) ........................... × _____ = + 6
Total eligible taxable capital gains designated by the trust in years after 2001 .......................... ×2 = + 7
Add lines 1 to 7............................................................................................................................................................... = 8
Total amount you used to reduce the trust’s business investment losses in years after 1985 and before 2022 .............. – 9
Line 8 minus line 9 ......................................................................................................................................................... = 10
Business investment losses for the year before reducing the losses............................................................................... 11
Enter the amount from line 10 or line 11, whichever is less. This is the reduction for the year.
(Enter this amount on line 13 of Schedule 1.) ................................................................................................................. – 12
Business investment losses for the year: line 11 minus line 12 ...................................................................................... = 13
Allowable business investment losses for the year: line 13 (__________) × 1/2 ............................................................. = 14
(Enter this amount on line 18 of the T3 return.)

Note: The fractions to be used at lines 5 and 6 are the inverse of the trust’s inclusion rates for 2000 and 2001. For example, if the trust’s
inclusion rate was 1/2, the inverse is 2. If the trust’s inclusion rate was 3/4, the inverse is 4/3. If the trust’s inclusion rate was 2/3, the
inverse is 3/2. For 2000 (and 2001, if applicable), use the inclusion rate from line 16 of the 2000 Schedule 1.

Line 19 – Other deductions from total income according to the trust document, the beneficiary is required
to include these amounts in income in the year they were
Generally, you can deduct expenses if they were paid to
earn income for the trust. Expenses include legal, paid. Therefore, you have to report these benefits as income
accounting, and management fees. You can also deduct on the beneficiary’s T3 slip, and you will deduct them again
the fees paid for advice or assistance to file an objection or from the trust’s income on line 28. To offset this
an appeal to an assessment or decision under the Act “double-deduction” of the same expenses, you have to add
(although you have to reduce the claim by any award or these amounts back into the trust’s income on line 22.
reimbursement you received for such expenses). Provide details of the amount entered on this line,
including the nature and amount of each expense, and
Do not deduct the following:
where on the return or financial statement these expenses
■ outlays and expenses that apply to the capital assets of have been claimed.
the trust (see “Outlays and expenses” on page 37)
■ personal expenses of the beneficiaries or trustees, such Line 23 – Value of other benefits to a
as funeral expenses or probate fees beneficiary
■ any amounts paid to beneficiaries You may have paid benefits, such as amounts for personal
or living expenses, from the trust to a beneficiary. The
Note beneficiary has to include the value of these benefits in
Enter investment counsel fees paid (paragraph 20(1)(bb)) income in the year they were paid, unless the value:
on line 14. For more information, see “Lines 13 to 17 –
Carrying charges and interest expenses” on page 44. ■ is already included in calculating the beneficiary’s
income for the year
Line 22 – Upkeep, maintenance, and taxes of ■ has been used to reduce the adjusted cost base of the
a property used or occupied by a beneficiary beneficiary’s interest in the trust
Enter on line 23, the amount of these benefits that were
You may have claimed expenses on the T3 return that relate
included as income on the beneficiary’s T3 slip.
to the upkeep, maintenance, and taxes on a property used
by a beneficiary. You may have claimed these expenses on Because you have to deduct the value of the benefits as
a financial statement, such as a rental statement. Generally, income allocations and designations to beneficiaries on
if these amounts were paid out of the income of the trust line 28, and the trust cannot deduct this amount, you have
to add it back into the trust’s income by including the
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amount on line 23. Provide details of the amount A trust will be subject to a loss restriction event when a
entered on this line, including the nature and amount of person or partnership becomes a majority-interest
each benefit. beneficiary of the trust or a group becomes a
majority-interest group of beneficiaries of the trust.
Lines 26, 27, and 28 – Total income The concepts of majority-interest beneficiary and
allocations and designations to majority-interest group of beneficiaries will apply as they
beneficiaries ▲ do under the existing income tax provisions for affiliated
Generally, a trust receives income and pays it to the persons, with appropriate modifications. In general, under
beneficiaries according to the terms of a will or trust the affiliated persons provisions, a majority-interest
document. We call this allocating income (defined beneficiary of a trust is a beneficiary who, together with
on page 5). In most cases, you enter the income on the persons and partnerships with which the beneficiary is
T3 return in Step 2, then enter it on line 26 in Step 3, so affiliated, has a beneficial interest in the trust’s income or
the trust does not pay tax on the income. The beneficiary capital with a fair market value that exceeds 50 per cent of
then has to report the income on their return. For more the fair market value of all the beneficial interests in income
information, see “Schedule 9 – Income Allocations and or capital, respectively, in the trust. Additional rules apply
Designations to Beneficiaries” on page 45. to beneficiaries who have discretionary interests.

In some cases, income that is allocated to a beneficiary may The rules that deem certain transactions or events to
be taxed on the trust’s return, instead of on the beneficiary’s involve (or not involve) an acquisition of control of a
return. In other cases, income that is usually reported on corporation are applicable, with appropriate modifications,
the trust’s T3 return may instead be reported on the in determining whether a trust is subject to a loss restriction
beneficiary’s T1 return. For more information, see event under section 251.2. For example, rules similar to the
“Exceptions and limits to income allocations” on page 47. continuity of ownership rules that deem a corporate
acquisition of control not to occur in certain circumstances
Note involving the death of a shareholder, or involving
Income allocated to a beneficiary that is not deductible transactions within certain groups of shareholders, will also
by the trust (other than a designated amount included in apply in the context of trusts and their beneficiaries.
line 27) should not be included on line 26, or reported on
Schedule 9. Many of the typical transactions or events involving
changes in the beneficiaries of a personal (that is, family)
On line 26, enter the amounts paid or payable to trust will not, because of the continuity of ownership rules,
beneficiaries in the current year, including any amount result in the trust being subject to a loss restriction event.
designated by a preferred beneficiary election. On line 27,
subtract the amounts claimed under subsections 104(13.1) These measures, apply to transactions that occur after
and 104(13.2). Enter the result on line 28. March 20, 2013.

For more information, see “Income to be taxed in the trust” The acquisition of equity in certain types of investment
on page 48. trusts will not be treated as a loss restriction event of the
trusts if certain conditions are met. Certain relieving
Tax tip measures exist where a trust is subject to a loss restriction
Line 28 has to equal the amount entered on line 928 of event; for example, the filing due date of the trust’s T3
Schedule 9. return and issuance of T3 slips, and balance-due date have
been extended in respect of a tax year that is deemed to end
Step 4 – Calculating taxable income: before the loss restriction event.
Lines 32 to 43 Line 33 – Non-capital losses of other years
Losses of other years – If you are claiming a loss from other
A non-capital loss could arise if the trust had a loss from
years, provide a continuity statement of the loss balances.
business or property in a year, and it was more than the
Be sure the statement includes the year the loss was trust’s income from all sources in that year.
incurred, the amounts applied in previous years, and the
The tax year in which the non-capital loss was incurred will
balance remaining at the beginning of the current year.
affect the extent to which you can carry over the unused
If the trust is claiming more than one loss, or if a claim portion. You can carry over the unused portion of a loss
needs more explanation, send us a note providing the that was incurred in a tax year-ending:
details.
■ on or after January 1, 2006, back 3 years and forward
20 years
Loss trading – Rules for trusts
■ after March 22, 2004, and before January 1, 2006,
The loss streaming rules generally apply to limit a
back 3 years and forward 10 years
corporation’s trading of certain tax attributes (for example,
non-capital losses, net capital losses, farm losses, and ■ before March 23, 2004, back 3 years and forward 7 years
unused investment tax credits) where a person or group
If the trust has an unused non-capital loss from a previous
of persons acquires control of the corporation. The
year, you can use it to reduce taxable income for the current
loss-streaming and related rules apply, with appropriate
year. Enter this amount on line 33.
modifications, to a trust that is subject to a loss restriction
event.

30 canada.ca/taxes
For information on how to carry back an unused Filings to amend the tax position of the trust and the
non-capital loss, see “Form T3A, Request for Loss beneficiary are as follows:
Carryback by a Trust” on page 31.
■ the trust would file Form T3A, Request for Loss
Farming and fishing losses – If the trust had a farming or Carryback by a Trust in connection with the loss year to
fishing loss from a previous year, see “Lines 35 to 40 – request the loss be carried back to the prior year
Other deductions to arrive at taxable income” on page 31.
■ the trust would file Form T3-ADJ, T3 Adjustment
Request for the prior year to reflect a late subsection
Line 34 – Net capital losses of other years 104(13.1) or (13.2) designation so as to amend the trust’s
Generally, if the trust’s allowable capital losses are more T3 return
than its taxable capital gains in a year, the difference is a net
■ the trust would issue amended T3 slips to the beneficiary
capital loss for that year. You can use the net capital loss to
for that prior year, reducing the income allocated
reduce the trust’s taxable capital gains in any of the three
preceding years or in any future year. ■ the beneficiaries would file a Form T1-ADJ,
T1 Adjustment Request to reflect the revised T3 slip and
Within certain limits, you can deduct all or a portion of the
to amend the T1 return
trust’s net capital losses of other years that have not already
been claimed. The CRA will only reassess beneficiaries’ returns if the tax
years to which they relate and the tax year of the trust to
For more information, see Guide T4037, Capital Gains.
which the loss will be applied are not statute-barred.
Listed personal property losses – Losses on listed personal
The trust must file Forms T3A and T3-ADJ together as they
property (LPP) can be applied only against LPP gains.
must be processed concurrently.
Claim the unused portion of an LPP loss from a previous
year against a current-year LPP gain on line 8 of Schedule 1, If you apply a net capital loss carryback, a non-capital loss
or on line 8 of Form T1055, Summary of Deemed may be increased or created if the loss was previously used
Dispositions (2002 and later tax years), if applicable. For to reduce the amount of taxable capital gains in the year of
more information, see “Lines 7 to 9 – Listed personal the carryback.
property” on page 40.
For more information, see archived Interpretation
The unused portion of an LPP loss can be carried back Bulletin IT-232, Losses – Their Deductibility in the Loss
three years and forward seven years, and applied against Year or in Other Years.
LPP gains in those years.
For information on how to carry back an unused net capital Lines 35 to 40 – Other deductions to arrive at
loss or an LPP loss, see the next section. taxable income
Enter other deductions, such as:
Form T3A, Request for Loss Carryback by
■ prior-year limited partnership, farming or fishing losses
a Trust (see Note)
Use this form to carry an unused loss back to a previous
year. You have to make your request on or before the due ■ the $2,000 deduction allowed to a non-profit organization
date of the T3 return for the year in which the trust reporting income from property
incurred the loss. You can file the completed form with the (subparagraph 149(5)(f)(i) of the Act)
current year’s T3 return or, where applicable, file it together ■ the amount of foreign income reported that is exempt
with the Form T3-ADJ, T3 Adjustment Request. from tax in Canada because of a tax treaty or convention
If the loss was not deducted fully in a previous year, keep a (identify the exempt income amount, and the treaty or
schedule of the unused portion so you can deduct it in convention that applies)
future years. Always apply the oldest loss within a class of Note
losses first. For example, apply a 2020 non-capital loss The unused portion of a farming or fishing loss
before a 2021 non-capital loss. incurred in a year can be carried back 3 years. For more
A non-capital loss carryback is used to reduce the taxable information on the deductibility of farming or fishing
income of the trust in a previous year. A net capital loss losses, see Chapter 6 – Losses in Guide T4002,
carryback is deductible in computing a trust’s taxable Self-employed Business, Professional, Commission,
income for a previous tax year only to the extent of the Farming, and Fishing Income.
trust’s taxable capital gains in that previous year.
If you allocated income or designated taxable capital gains
Step 5 – Summary of tax and credits:
to beneficiaries in a previous year and you subsequently Lines 44 to 72
carry back a loss to that year, the trust may make a late Line 44 – Total federal tax payable ▲
subsection 104(13.1) or (13.2) designation only where the
application of the loss results in nil taxable income for the Enter the federal tax payable from line 33 of Schedule 11,
trust. or line 54 of Schedule 12.

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Line 45 – Provincial or territorial Line 68 – Total other credits
tax payable ▲ Certain provincial or territorial tax credits are available to a
For information on which provincial or territorial form to trust (lines 54 to 67) if the trust meets both of the following
use, see “Provincial and territorial income tax” on page 61. conditions:

Line 48 – Tax paid by instalments ▲ ■ it was a resident of the province or territory at the end of
the tax year
Enter the total instalment payments made by the trust. If
the account number on the trust’s receipt is not the same as ■ it incurred eligible expenditures related to certain
the one on page 1 of the return, enter the account number activities
from the receipt to the right of line 48. If you received a
You can find specific information on the following forms:
refund of all or part of an instalment, do not include this
amount on line 48. ■ Form T1129, Newfoundland and Labrador Research and
Development Tax Credit (Individuals) (for the
Note
Newfoundland and Labrador research and development
Do not include, on line 48, any tax withheld on income
tax credit)
earned by the trust. Any amount of tax withheld, as
shown on the trust’s information slips, is to be reported ■ Form T1232, Yukon Research and Development Tax
on line C. See the following section. Credit (Individuals) (for the Yukon research and
development tax credit)
Tax instalments ■ Form T88, British Columbia Mining Exploration Tax
For tax years before 2016, testamentary trusts were Credit (Individuals) (for the British Columbia mining
exempted from the tax instalment rules and therefore were exploration tax credit)
required to pay any tax owing within 90 days after the end
Use the appropriate form to calculate the tax credit. Send us
of the tax year. For 2016 and subsequent tax years, only a
the form with the trust’s return.
graduated rate estate is exempt from making the tax
instalments. However, consistent with current In the case of the research and development tax credits, the
administrative practices, the CRA will continue to not trust can designate some or all of these credits to
assess penalties or interest where a trust fails to make beneficiaries of the trust. Subtract the amount designated to
sufficient instalment payments. beneficiaries from the credit calculated on the form.
Enter the result on the corresponding credit line of the
Lines C, D, and 49 – Total tax deducted ▲ trust’s return.
If tax was withheld on any income earned by the trust,
enter the amount of tax withheld on line C. Send us Canadian journalism labour tax credit
information slips if they are available. If an information slip A trust can claim the Canadian journalism tax credit, once
is not available, send us a statement from the issuer, designated by the Minister as a qualified Canadian
indicating the income reported and the tax withheld. journalism organization (QCJO), provided the trust is one
Do not allocate the tax that was withheld to the of the following:
beneficiaries. ■ A qualifying journal organization (QJO)
Transfer to Quebec – If the trust was resident in Quebec ■ A member of a partnership (other than a specified
and earned income outside that province, tax may have member of the partnership) that is a QJO
been withheld for a province or territory other than
Quebec. You can transfer up to 45% of this amount to the If the trust is claiming the tax credit, provide all of the
province of Quebec. Enter this amount on line D. If this following supporting information:
does not apply to you, enter “0” on line D. ■ a copy of the letter from the CRA designating the
Subtract the transferred amount from total tax deducted, organization to be a QCJO
and enter the result on line 49. ■ the period for which the organization was a QJO in the
tax year
Line 52 – Capital gains refund
■ any amount the organization received from the Aid to
This refund is available only to a mutual fund trust that has Publishers component of the Canada Periodical Fund in
refundable capital gains tax on hand at the end of the year. the tax year
To calculate the refund, complete Form T184, Capital Gains
Refund to a Mutual Fund Trust. ■ a letter that states the name of your organization, your
trust account number, the tax year for which you are
Line 53 – Part XII.2 tax credit claiming the credit, and the dollar amount of the tax
credit you are claiming
If the trust is the beneficiary of another trust and received a
T3 slip from that trust with an amount in box 38, enter that ■ a schedule showing all of the following information in
amount on line 53. respect of each eligible newsroom employee:
– the employee’s name;
– the employee’s social insurance number (SIN);

32 canada.ca/taxes
 – the salary or wages payable to the employee for the Yukon business carbon price rebate
portion of the tax year (on or after January 1, 2019) Trusts can claim the Yukon Business Carbon Rebate. To
throughout which your organization was a QJO; claim this rebate complete Part 2 of Schedule YT(S14),
Yukon Government Carbon Price Rebate, and enter this
– the amount of any assistance received in the tax year in
amount on line 67 of the T3 Return.
respect of the employee that had not been repaid
before the end of the year pursuant to a legal If you are claiming this rebate for the tax years 2019, 2020
obligation to do so. and 2021, you will need to send a T3-ADJ Adjustment
Request, requesting an adjustment to line 67.
Send the supporting information with your T3 return to
your tax centre. For more information, see 5011-PC Yukon Information
Guide.
Note
The amount of the partnership’s Canadian journalism
labour tax credit is divided between qualifying members Line 70 – Balance owing or refund ▲
of the partnership. This amount allocated to the trust by The balance owing or refund is the difference between the
the partnership can be claimed at line 59 provided it is total taxes payable on line 47 and the total credits on
supported by a valid T5013. line 69. Generally, a difference that is $2 or less does not
have to be paid, nor will it be refunded.
For more information on the requirements that must be met
to be a QCJO and a QJO as well as information on
calculating the Canadian journalism labour tax credit, Line 71 – Amount enclosed ▲
go to canada.ca/support-canadian-journalism. Enter the amount of the payment you are sending the CRA
with your tax return. For more information see “Payment
Return of fuel charge proceeds to farmers tax credit options” on page 21.
This refundable tax credit provides a return of a portion of
the fuel charge proceeds from the federal carbon pollution Line 72 – Refund code ▲
pricing system directly to farming businesses in provinces
If the trust is entitled to a refund, enter one of the following
that do not currently have a system that meets the federal
codes in the refund code box:
requirements. These designated provinces are Ontario,
Manitoba, Saskatchewan and Alberta. 0 if you want us to refund the credit
This credit is considered to be government assistance that 1 if you want us to keep the credit for next year
you received in the year and is taxable to you. Include in
2 if you want us to hold the credit and apply it to an
your income the amount of the credit in the same tax year
expected assessment of an additional amount to be
in which you claimed the credit.
paid. Send us a letter providing details
Trusts claiming this credit on line 64, including if they are
We consider the credit to have been received on the date we
allocated a credit by a partnership, should complete the
assess your return. First, we will apply a credit to any
calculation using form T2043 and send it with their T3
outstanding balance. Then, we will direct any amount left
Trust Income Tax and Information return.
over according to the code you enter. If you do not enter a
For more information, see Guide T4002, Self-employed code, we will refund the credit.
Business, Professional, Commission, Farming, and Fishing
Income and Form T2043, Return of Fuel Charge Proceeds to Name and address of person or company
Farmers Tax Credit. who prepared this return
British Columbia clean building tax credit Complete this part if someone other than the trustee,
executor, liquidator, or administrator prepared this return.
The clean buildings tax credit is a refundable income tax
credit for qualifying retrofits that improve the energy
efficiency of eligible commercial and multi-unit residential Certification ▲
buildings with four or more units. The retrofit must The trustee, executor, liquidator, or administrator of the
improve the energy efficiency of an eligible building and trust has to complete and sign this part.
meet energy-use targets. The credit amount is 5 percent of
qualifying expenditures paid for the retrofit less:
Chapter 3 – Trust schedules and
■ expenses claimed by any other taxpayer
forms
■ any amount received or receivable as under an assistance
program in respect of the qualifying expenditures, and Schedule 1 – Dispositions of Capital
■ any amount provided as a forgivable loan that was Property
designed to provide assistance with the financing or cost
of the alteration or renovation if it has not been repaid If the trust disposed of capital property in the year, see
Guide T4037, Capital Gains, for the general rules regarding
under a legal obligation to do so.
capital gains and losses. We explain the rules that relate to
Claim this credit on line 65 of the T3 Return. trusts in this section.

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Complete Schedule 1 and file it with the T3 return if the If there is no advantage in respect of the gift, the full
trust had dispositions of capital property during the year. amount of the capital gain realized on the gift is eligible for
Do not include any deemed dispositions that are reported an inclusion rate of zero. However, if there is an advantage,
on Form T1055, Summary of Deemed Dispositions (2002 only part of the capital gain is eligible for the inclusion rate
and later tax years). For more information, see of zero. The remainder is subject to an inclusion rate
“Form T1055, Summary of Deemed Dispositions (2002 and of 50%.
later tax years)” on page 41.
The zero inclusion rate may also apply to a gift of a capital
Transfer any taxable capital gains from line 24 of Schedule 1 property included in the previous list if the gift is made to a
to line 1 of the return. qualified donee by a GRE (or by a former GRE). For such
gifts by a GRE (or former GRE) the donated property must
A disposition of capital property includes any of the
be property that was acquired by the estate on and as a
following:
consequence of the death of the individual (or property that
■ the sale of property was substituted for such property). In such circumstances,
the zero inclusion rate will apply to a capital gain realized
■ the sale of the principal residence on the deemed disposition of the property immediately
■ the distribution or exchange of property before the individual’s death and reported on the
individual’s final return, as well as to a capital gain realized
■ the making of a gift by the estate on the transfer of the property to the qualified
■ a redemption of shares donee.

■ a debt settlement For more information, see T3 Schedule 1A, Capital Gains on
Gifts of Certain Capital Property, section “Capital gains
■ a theft realized on gifts of certain capital property” in
■ the destruction of property Pamphlet P113, Gifts and Income Tax, and Income Tax
Folio S7-F1-C1, Split-receipting and Deemed Fair Market
Note Value.
We do not consider a disposition to have occurred if two
corporations or a parent corporation and its subsidiary Distribution of property to beneficiaries
have amalgamated and there is no consideration for the
redemption of shares. For more information, If a personal trust distributes property to a beneficiary (to
call 1-800-959-8281. settle in whole or in part the beneficiary’s capital interest in
the trust), send us a statement that includes all of the
following information about the distributed property:
Certain gifts – zero inclusion rate
Generally, a trust’s taxable capital gain from the disposition ■ the name and address of the recipient or recipients
of capital property is 50% of the trust’s capital gain with ■ a description of the property
certain exceptions.
■ the fair market value (FMV) on the day it is distributed
If the trust donated certain types of capital property to a
registered charity or other qualified donee, the trust may ■ the cost amount on the day it is distributed
not have to include in its income any amount of capital gain For information regarding the distribution of property to
realized on such gifts. The trust may be entitled to an a non-resident beneficiary, see “Capital dispositions – Rules
inclusion rate of zero on any capital gain realized on such for trusts” on page 35.
gifts.
Donated capital property, where an inclusion rate of zero Graduated rate estate elections (losses)
may apply, includes all of the following: For 2016 and subsequent tax years, if you are a legal
■ a share, debt obligation, or right listed on a designated representative administering the graduated rate estate of a
stock exchange deceased person, you may:

■ a share of the capital stock of a mutual fund corporation ■ elect under 164(6) to treat certain capital losses and
terminal losses, arising in the first tax year of the
■ a unit of a mutual fund trust deceased person’s graduated rate estate, as losses of the
■ a prescribed debt obligation deceased person for that person’s final tax year

■ an interest in a related segregated fund trust ■ elect under 164(6.1) to carryback certain amounts relating
to employee stock options, arising in the first tax year of
■ certified ecologically sensitive land (including a covenant the deceased person’s graduated rate estate, to be
or an easement to which land is subject or, in the case of deducted in computing the deceased person’s income for
land in the Province of Quebec, a real servitude, or a that person’s final tax year
personal servitude where certain conditions are met)
gifted to certain qualified donees other than private Prior to January 1, 2016, these elections were available to all
foundations. For more information, see “Gifts of estates. However, effective January 1, 2016, these elections
ecologically sensitive land” in Pamphlet P113, Gifts and are only available to an estate that is a graduated rate
Income Tax, and Income Tax Folio S7-F1-C1, estate.
Split-receipting and Deemed Fair Market Value.

34 canada.ca/taxes
These elections apply only to the first tax year of a deceased income under paragraph 7(1)(e) for the tax year in which
person’s estate. The elections do not affect the return of the the person died. Generally, where the value of those
deceased person for any year before the year of death. unexercised options subsequently declines and the options
expired or were exercised or disposed of in the first year of
Due date of election and amended final T1 return the estate, the deceased’s legal representative may elect to
In addition to filing the election you are also required to file treat an amount determined under 164(6.1) as a loss of the
an amended final T1 return of the deceased person to give deceased from employment for the year in which the
effect to the rules. Both the election and amended final person died.
T1 return must be filed by the later of: You can only make this election for employee security
■ the filing due date of the deceased person’s final options that expired, or that you exercised, or disposed of
T1 return that the legal representative is required to file in the first tax year of the graduated rate estate.
or has elected to file If you are making an election under 164(6.1) for the
■ the filing due date for the estate’s T3 return for its first graduated rate estate, send us the following:
tax year ■ a letter indicating that you are making an election under
When filing the amended T1 return, you must clearly 164(6.1) and providing all of the following information:
identify the amended final T1 return of the deceased person – the amount of the benefit included in the deceased
as a “164(6) election” or a “164(6.1) election.” person’s income for the tax year in which the person
164(6) election died
Generally, you can make this election for: – the amount, if any, by which the value of the right
■ all or any portion of the capital loss (to the extent the immediately before it was exercised or disposed of
graduated rate estate’s capital losses exceed its capital exceeds the amount, if any, the deceased person paid
gains) resulting from the disposition of the graduated to acquire the right
rate estate’s capital property as reported on Schedule 1 – the amount of the loss you elect to be a loss of the
– the amount of losses available to be carried back to the deceased taxpayer from employment in the year in
final T1 Individual return is the amount of losses which the taxpayer died
before the inclusion rate is applied Use the following calculation to determine the amount that
■ all or any portion of the terminal loss (not exceeding the can be carried back to the deceased person’s final T1 return:
total of the graduated rate estate’s non-capital loss and A – (B + C)
farm loss before the election) resulting from the
disposition of all of the depreciable property of a where:
prescribed class of the graduated rate estate A = the deemed benefit for the option included on the
deceased person’s final return
If you are making an election under 164(6) for the
B = the amount by which the value of the option immediately
graduated rate estate, send us the following: before it expired, was exercised, or disposed of, is more
■ a letter indicating that you are making an election under than the amount the deceased person paid to acquire it
164(6) and providing all of the following information: C = the amount by which A is more than B, if a security
option deduction for this option was claimed on the
– the amount of the capital loss you elect to be a capital deceased person’s final return, multiplied by 50%
loss of the deceased person
– the amount of the terminal loss you elect to be If you make this election, reduce the trust’s adjusted cost
deductible in computing the income of the deceased base of the option by A minus B, without considering C.
person
■ a schedule with details of the capital loss
Capital dispositions – Rules for trusts
Affiliated persons
■ a schedule with the details of the terminal loss and a A trust is considered to be affiliated with its majority-
statement of the amounts that would have been the interest beneficiary and any person who is affiliated with
non-capital loss and the farm loss of the estate for its first such a beneficiary. As a result, the rules that apply to
tax year had the election not been made affiliated persons may apply to a trust and its beneficiaries,
The graduated rate estate cannot claim a loss that you have settlors, or contributors. For more information,
elected to transfer to the deceased person’s final T1 return. call 1-800-959-8281.
However, you have to report the dispositions of the estate
property on Schedule 1. If the total is a loss, enter the Distribution to non-resident beneficiary
amount elected under subsection 164(6) on line 20. A trust that distributes property to a non-resident
beneficiary in satisfaction of all or part of the beneficiary’s
164(6.1) election capital interest in the trust, is deemed to have disposed of
This election applies to certain unexercised employee such property for proceeds equal to the property’s fair
security options held by a person, at the time of death, in market value (FMV) at that time.
respect of which a benefit has been included in the person’s

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This rule does not apply to property that meets any of the cultural property” in Guide T4037, Capital Gains, archived
following conditions: Interpretation Bulletin IT-407, Dispositions of Cultural
Property to Designated Canadian Institutions,
■ a share of the capital stock of a non-resident owned
Pamphlet P113, Gifts and Income Tax, and Income Tax
investment corporation
Folio S7-F1-C1, Split-receipting and Deemed Fair Market
■ real or immovable property situated in Canada, a Value.
Canadian resource property or a Canadian timber
Proceeds of disposition
resource property
This is usually the amount that the trust received or will
■ capital property used in, Class 14.1 (eligible capital receive for its property. In most cases, it refers to the sale
property before January 1, 2017) in respect of or property price of the property. In certain situations, the proceeds
described in the inventory of, a business carried on by of disposition are set by rules in the Act.
the taxpayer through a permanent establishment in
Personal trust – When this kind of trust distributes
Canada at the particular time
property to a beneficiary, and there is a resulting
■ an excluded right or interest of the taxpayer disposition of all or part of the beneficiary’s capital interest
in the trust, we generally consider the trust to have received
And the conditions in subsection 107(2) are met and
proceeds of disposition equal to the “cost amount” of the
subsection 107(4.1) is not applicable.
property. The cost amount of a capital property (other than
a depreciable property) is its adjusted cost base. We define
Trust emigration “Adjusted cost base” on page 37.
A trust that ceases to be resident in Canada is deemed to
have disposed of all property, including certain taxable The cost amount of a depreciable property is calculated
Canadian property, for proceeds equal to the property’s as follows:
FMV at that time, and reacquired the property, at the same ■ if the property was the only property in the class, the cost
value, immediately thereafter. amount is the undepreciated capital cost (UCC) of the
These rules do not apply to any of the following properties, class before the distribution
among others: ■ if there is more than one property in the class, the cost
■ real or immovable property situated in Canada, a amount of each property is as follows:
Canadian resource property, or a Canadian timber
Capital cost of
resource property Capital all properties in UCC Cost
■ capital property used in, Class 14.1 (eligible capital cost the class that of amount
of the ÷ have not been × the = of the
property before January 1, 2017) in respect of or property
property previously class property
described in the inventory of, a business carried on by disposed of
the taxpayer through a permanent establishment in
Canada at the particular time
Where a personal (or prescribed) trust distributes property
■ pension or other similar rights or interests to a beneficiary to settle all or part of the beneficiary’s
capital interest in the trust, the trust can elect under
■ payments out of an AgriInvest Fund 2
subsection 107(2.001) of the Act to not have the trust’s
The trust or beneficiary can defer paying tax resulting from proceeds of disposition equal to the cost amount of the
the deemed disposition by providing acceptable security. property.
To arrange security, call 1-800-959-8281.
A subsection 107(2.001) trust election is applicable to
distributions made after October 1, 1996 when:
Trust emigration – information reporting
A trust that ceases to be resident in Canada, and that owns ■ the trust was resident in Canada when it distributed
property with a total FMV of more than $25,000 at that the property
time, has to file Form T1161, List of Properties by an ■ the property is taxable Canadian property
Emigrant of Canada, with its T3 return for that year, listing
each property the trust owned at that time. For the ■ the property is property of a business carried on by the
purposes of determining whether Form T1161 is required, trust through a permanent establishment in Canada.
property does not include: This includes capital property and property described in
the inventory of the business, immediately before the
■ money that is legal tender in Canada and all deposits time of distribution
of such money
To elect under subsection 107(2.001), the trust must send us
■ pension or other similar rights or interests a letter for the tax year in which the property was
■ any item of personal-use property, with a FMV of less distributed.
than $10,000 at the time the trust ceased to be a resident The letter should include all of the following information:
in Canada
■ a declaration to elect under subsection 107(2.001)
Canadian cultural property ■ name of the trust
For information on dispositions of Canadian cultural
property, see “Selling or donating certified Canadian ■ trust account number

36 canada.ca/taxes
■ type of trust For more information, see Guide T4037, Capital Gains, and
archived Interpretation Bulletin IT-456, Capital Property –
■ trust’s tax year-end date
Some Adjustments to Cost Base, and its Special Release.
■ residency status of the trust, (resident trust or
Generally effective after February 27, 2004, the cost of a
non-resident trust)
capital interest in a trust that is not held by the taxpayer as
■ if applicable, the date the trust became a resident of capital property is deemed to be equal to the cost amount
Canada in the year used for inventory valuation purposes less the total of all
returns of capital and non-taxable capital gains payable to
■ if applicable, the date the trust became a non-resident of the taxpayer in respect of the interest, prior to the
Canada in the year disposition. At any particular time, inventory valuation is
■ name, address and signature of trustee making the deemed to be the FMV of the capital interest plus the sum
election of all returns of capital and non-taxable capital gains
payable before that time.
If you file an election, we consider the trust, if resident in
Canada, to have received proceeds of disposition equal to Beneficial interest in a trust – A trust may receive a T3 slip
fair market value (FMV) of the property at the time of with an amount showing in box 42. Use this amount to
distribution. determine the ACB of your interest in that trust. Reduce
the cost of your interest by the total of the positive amounts
Effective for distribution of property after shown in box 42 of the T3 slips received from the trust for
December 20, 2002, a personal (or prescribed) trust is all tax years after 2003. Also reduce it by all amounts (other
deemed to have disposed of property for proceeds equal to than amounts received as proceeds of disposition or as a
the property’s FMV at the time of the distribution if both of distribution of income of the trust) received from the trust
the following conditions are met: before 2004. If the amount in box 42 is in brackets, it will
■ at a particular time before December 21, 2002, there was a result in an increase in the ACB. You may want to contact
qualifying disposition (within the meaning assigned by the trustee of the trust to determine if there are any other
subsection 107.4(1)) of the property, or of other property adjustments required in calculating the ACB of your
for which the property is substituted, by a particular interest. For more information on how to account for
partnership or a particular corporation, as the case may box 42 amounts, see Information Sheet RC4169, Tax
be, to the trust Treatment of Mutual Funds for Individuals.

■ the beneficiary is neither the particular partnership nor Note

the particular corporation If your ACB is reduced to an amount below zero at any
time in the tax year, we consider a deemed disposition
Post-1971 spousal or common-law partner trust – When to have occurred. The negative amount is deemed to be
this kind of trust, whose beneficiary spouse or common-law a capital gain. Your ACB is then reset to zero. For more
partner is still alive, distributes property such as capital information, see “Line 3 – Mutual fund units and other
property, resource property, or land inventory to a person shares” on page 38.
who is not the beneficiary spouse or common-law partner,
we consider the trust to have received proceeds of Property acquired before 1972
disposition equal to the property’s FMV. Before 1972, capital gains were not taxed. If the trust sold
This also applies to both of the following: property acquired before 1972, you have to use special rules
when calculating the capital gain or capital loss to remove
■ a joint spousal or common-law partner trust that any capital gains accrued before 1972. These rules are found
distributes property to a person who is not the settlor, on Form T1105, Supplementary Schedule for Dispositions
beneficiary spouse or common-law partner and the of Capital Property Acquired Before 1972. Use Form T1105
settlor, beneficiary spouse or common-law partner is still to calculate the gain or loss from selling property the trust
alive owned before 1972.
■ an alter ego trust that distributes property to a person
who is not the settlor and the settlor is still alive Outlays and expenses
These are amounts incurred to sell a capital property such
Trust other than a personal trust – When this kind of trust as finder’s fees, commissions, broker’s fees, legal fees, and
distributes property to a beneficiary and there is a resulting advertising costs. You can deduct outlays and expenses
disposition of all or part of the beneficiary’s capital interest from the proceeds of disposition when calculating the
in the trust, we consider the trust to have received proceeds capital gain or capital loss.
of disposition equal to the property’s FMV.
In the case of depreciable property sold at a loss, these
For more information, see Chapter 2 in Guide T4037, outlays and expenses reduce the proceeds from the sale to
Capital Gains. be credited to the class. Do not claim them as deductions
from the trust’s income.
Adjusted cost base (ACB)
This is usually the cost of the property plus expenses Note
incurred to obtain it. The adjusted cost base can differ from Outlays and expenses made or incurred in respect of
the original cost if changes have been made to the property deemed dispositions cannot be claimed.
between the time it was acquired and the time it was sold.
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Lines 1 and 2 – Qualified small business Qualified farm or fishing property of a personal trust
corporation shares and qualified farm or includes any of the following property the personal trust
owns:
fishing property
Use these sections if you are filing a return for a personal ■ a share of the capital stock of a family farm or fishing
trust reporting a capital gain or loss from the disposition corporation
of qualified small business corporation shares or qualified ■ an interest in a family farm or fishing partnership
farm or fishing property. For more information,
see Guide T4037, Capital Gains. ■ real or immovable property, or a fishing vessel, or
property included in Class 14.1 used in carrying on a
Do not report a loss the trust incurred in disposing of farming or fishing business in Canada by either of the
shares of, or debts owing by, a small business corporation following:
in an arm’s length transaction. For information on these
types of losses, see “Line 18 – Allowable business – an individual beneficiary (who is entitled to receive
investment losses (ABIL)” on page 28. directly from the trust any income or capital of the
trust), or that beneficiary’s spouse or common-law
Capital gains from the disposition of qualified small partner, child, or parent
business corporation shares, or qualified farm or fishing
property may qualify for the capital gains deduction where – a family farm or fishing corporation, or a family farm
the personal trust is allocating and designating the eligible or fishing partnership in which either an individual
capital gains to a beneficiary. Complete Schedules 3 and 4, beneficiary, or the beneficiary’s spouse or common-law
and see “How to complete the T3 slip” on page 64. partner, child, or parent own a share in the corporation
or an interest in the partnership
A share in a small business corporation is considered to
be a qualified small business corporation share if all of the Note
following conditions are met: In addition, certain conditions must be met for property
to be considered to have been used in the course of
■ at the time of disposition, it was a share of the capital carrying on a farming or fishing business in Canada.
stock of a small business corporation and was owned For more information, see “Chapter 5 – Eligible Capital
by the personal trust, or a partnership related to the Expenditures” and “Chapter 7 – Capital Gains”
personal trust in Guide T4002, Self-employed Business, Professional,
■ throughout the 24 months before the disposition, only Commission, Farming, and Fishing Income.
the personal trust, or a person or a partnership related
to the personal trust, owned the share Line 3 – Mutual fund units and other shares
■ throughout that part of the 24 months immediately Use this section to report a capital gain or loss when the
before the disposition, while the personal trust or person trust sells mutual fund units, shares, or securities that are
or partnership related to the personal trust owned the not described in any other section of Schedule 1.
share, it was the share of a Canadian-controlled private If you are deemed to have a capital gain as a result of a
corporation (CCPC), and more than 50% of the fair negative adjusted cost base (ACB), use this line to report
market value of the assets of that corporation: the deemed gain. Complete the first two columns with the
– was used mainly in an active business carried on number of shares and the name of the fund or corporation.
primarily in Canada by the CCPC, or by a related Enter the ACB in brackets in column 3 and the capital gain
corporation in column 5.

– was certain shares or debts of connected corporations

Line 4 – Bonds, debentures, promissory
– was a combination of the two notes, and other similar properties
For the purpose of a qualified small business corporation Use this section to report capital gains or losses when the
share, a person or a partnership is related to a personal trust sells these types of properties. The trust may receive
trust if it meets any of the following conditions: Form T5008, Statement of Securities Transactions, or an
account statement, showing details of the sale.
■ the person or partnership is a beneficiary of the
personal trust Also use this section to report capital gains or losses when
the trust sells options. For information on disposing of
■ the personal trust is a member of the partnership options to sell or buy shares, see archived Interpretation
■ the person is a member of a partnership that is a member Bulletin IT-96, Options Granted by Corporations to Acquire
of another partnership and is deemed to be a member of Shares, Bonds, or Debentures and by Trusts to Acquire
the second partnership Trust Units, and archived Interpretation Bulletin IT-479,
Transactions in Securities, and its Special Release.
■ when the personal trust disposes of the shares, all the
beneficiaries are related to the person from whom the
personal trust acquired the shares
Line 5 – Real estate and depreciable property
Use this section if the trust sold real estate or depreciable
For more information, see “Qualified small business property.
corporation shares” in Guide T4037, Capital Gains.

38 canada.ca/taxes
The trust cannot have a capital loss on the disposition of the property as its principal residence, is the settlor,
depreciable property. However, it can have a terminal loss spouse or common-law partner or former spouse or
under the capital cost allowance rules. For more common-law partner of the settlor (as the case may be)
information, see “Real estate, depreciable property and
■ a qualified disability trust, so long as, the “electing
other properties” in Guide T4037, Capital Gains.
beneficiary” of the trust for the year is:
Line 6 – Personal-use property – resident in Canada during the year
Use this section if the trust disposed of property used
primarily for the personal use or enjoyment of a beneficiary – the specified beneficiary of the trust during the year
under the trust, or any person related to the beneficiary. – a spouse, common-law partner, former spouse or
Personal-use property includes personal residences, common-law partner or child of the settlor
cottages, automobiles, and other personal and
household effects. ■ a trust, the specified beneficiary of which for the year is
an individual:
When you dispose of personal-use property, use both of the
following rules to calculate the capital gain or loss: – who has not reached 18 years of age before the end of
the year
■ if the ACB of the property is less than $1,000, the ACB is
considered to be $1,000 – who is resident in Canada during the year

■ if the proceeds of disposition of the property are less – one of whose parents is a settlor of the trust and either
than $1,000, the proceeds are considered to be $1,000 of the following conditions is met:

If the trust disposed of personal-use property that has an ■ neither the mother or father of the individual is alive
ACB or proceeds of disposition of more than $1,000, there at the beginning of the year
may be a capital gain or loss. Report the capital gain on ■ the trust arose before the beginning of the year as a
Schedule 1. If there is a capital loss, you usually cannot result of the death of either the mother or father of
deduct the loss in the year. For more information, see the individual
“Personal-use property” in Guide T4037, Capital Gains.
Special transitional rules apply to make sure a trust that
Calculate the capital gain or loss using the actual ACB and owned the property before 2017, which no longer qualifies
proceeds of disposition if the trust, or a person with whom to designate the property as its principal residence as a
the trust does not deal at arm’s length, meets all of the result of these new requirements, may continue to benefit
following conditions: from the principal residence deduction for the gains
■ personal-use property, including listed personal property accrued until December 31, 2016, where the trust meets all
(LPP), was acquired after February 27, 2000 of the following conditions:

■ circumstances suggest that acquisition of the property ■ was otherwise eligible to claim a principal residence
relates to an arrangement, plan, or scheme promoted deduction for a tax year that begins before 2017
by another person or partnership ■ owned the property, jointly with another person or
■ the property will be donated to a qualified donee otherwise, at the end of 2016, and owns it continuously
from January 1, 2017 until the disposition
Principal residence ■ disposed of the property after 2016
If a personal trust acquires a principal residence, it may be
exempt from tax on the capital gain on the disposition or A personal trust can only designate one property as a
deemed disposition of that residence. To be exempt, the principal residence. Also, the specified beneficiary cannot
residence has to qualify and be designated by the trust as designate any other property as a principal residence.
its principal residence. Before December 31, 2016, a Make the trust’s designation on Form T1079, Designation of
residence could usually be designated if a specified a Property as a Principal Residence by a Personal Trust.
beneficiary, or that beneficiary’s spouse or common-law You have to file this form with the trust’s T3 return for the
partner, former spouse or common-law partner, or child, year in which the disposition or deemed disposition occurs.
lived in it. A specified beneficiary is one who had a When a personal trust’s principal residence is distributed to
beneficial interest in the trust, and who ordinarily lived, or a beneficiary, the trust can elect to have a deemed
had a spouse or common-law partner, former spouse or disposition of the principal residence at its fair market
common-law partner, or child, who lived in the residence. value (FMV). When you make this election on the trust’s
After 2016, the types of trusts that are eligible to designate a return for the year of distribution, you may be able to claim
property as a principal residence are limited to a trust the principal residence exemption to reduce the gain, if any,
that is: from the trust’s deemed disposition. The beneficiary will
then acquire the property at its FMV.
■ an alter ego trust, spousal or common-law partner trust,
joint spousal or common-law partner trust, or certain For more information, see Form T1079 and Income Tax
trusts for the exclusive benefit of the settlor during the Folio S1-F3-C2, Principal Residence.
settlor’s lifetime (collectively referred to as “life-time
benefit trusts”), where the specified beneficiary of the
trust for each tax year for which the trust is designating
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Lines 7 to 9 – Listed personal property Line 13 – Capital losses from a reduction in
Use this section to report dispositions of listed personal business investment loss
property (LPP), including all or part of any interest in, Report a capital loss from a reduction in business
or any right to, all of the following properties: investment loss on line 13. For more information, see
■ prints, etchings, drawings, paintings, sculptures, or “Reduction in business investment loss” on page 28.
other similar works of art
Line 15 – Capital gains (losses) from reserves
■ jewellery
If the trust sold capital property, but did not receive the full
■ rare folios, rare manuscripts, and rare books payment at the time of the sale, you can claim a reserve for
the unpaid amount. Generally, the minimum amount of the
■ stamps
trust’s capital gain you have to report each year is 20% of
■ coins the taxable capital gain. If you claimed a reserve in 2021,
you have to bring it back into the trust’s income in 2022. If
Because an LPP is a type of personal-use property, the
any of the proceeds are to be paid after the end of the year,
capital gain or loss on the sale of the LPP item (or set of
you may be able to claim a new reserve. If you are claiming
items) is calculated the same way as for personal-use
a reserve on the trust’s return, you have to complete
property. For more information, see “Line 6 – Personal-use
Schedule 2. For more information about reserves, see
property” on page 39.
Guide T4037, Capital Gains.

Line 10 – T3 information slips – Capital gains Line 17 – Capital gains on gifts of certain
(or losses) capital property eligible for the 0%
Use this line to report the following amounts from all T3 inclusion rate
slips received for the tax year: Enter on this line the amount from line 3 of Schedule 1A.
On line 19, enter the capital gains on gifts of capital
■ capital gains from box 21 on a T3 slip
property included in lines 1 and 2 of Schedule 1A,
■ insurance segregated fund net capital losses from box 37 excluding amounts reported on line 17.
of a T3 slip
Note Line 20 – Total capital losses transferred
If the T3 slip has an amount in box 42, use the amount to under subsection 164(6) of the Act
calculate the adjusted cost base of the property. Follow Enter on this line the amount of capital losses you
the instructions on the back of the T3 slip. Do this for transferred under subsection 164(6) to the deceased
every year you own the property. For more information, person’s final T1 return. For more information, see
see Information Sheet RC4169, Tax Treatment of Mutual “Graduated rate estate elections (losses)” on page 34.
Funds for Individuals.
If a T3 slip identifies amounts for “qualified small business Line 23 – Non-qualified investments for TFSA,
corporation shares” or “qualified farm or fishing property” RRSP, RRIF, RDSP, and RESP trusts, or
in its footnote area, do not report these amounts on line 10. disposition of interest in a partnership
Enter them on line 1 or 2, whichever is applicable. reported under subsection 100(1.1) of the Act
You can view your T3 information slip online in My Use this section if the tax-free savings account (TFSA) trust,
Account at canada.ca/my-cra-account. registered retirement savings plan (RRSP) trust, registered
retirement income funds (RRIF) trust, registered disability
Line 11 – T5, T4PS, and T5013 information savings plan (RDSP) trust, or registered education savings
slips – Capital gains (or losses) Information plan (RESP) trust held non-qualified investments during
slips the tax year.
Use this line to report all of the following amounts received Use this section if, as part of any transactions or events, the
in the tax year: trust dispose of an interest in a partnership and the interest
in the partnership is acquired by a tax-exempt entity, non-
■ capital gains dividends from box 18 of a T5 slip residents, certain persons and certain partnerships; see
■ capital gains (or losses) from box 34 of a T4PS slip subsection 100(1) of the Act.

■ capital gains (or losses) from box 30 of a T5013 slip Line 24 – Total taxable capital gains (or net
If a slip identifies amounts for “qualified small business capital losses)
corporation shares” or “qualified farm or fishing property” Transfer the total taxable capital gains to line 1 of the trust’s
in its footnote, details, or other information area, do not return. If the amount on this line is negative, and is not
report these amounts on line 11. Enter them on line 1 or 2, used to reduce your deemed dispositions on Form T1055,
whichever is applicable. Summary of Deemed Dispositions (2002 and later tax
You can view your T5, and other tax information slips years), you have a net capital loss. Do not enter it on line 1
online in My Account at canada.ca/my-cra-account. of the return. For more information, see “Form T3A,
Request for Loss Carryback by a Trust” on page 31.

40 canada.ca/taxes
 Note The due date for both the T3 return as well as any balance
If the amount on line 24 is a capital gain and you payable of the deemed taxation year will be 90 days after
calculate a net capital loss on Form T1055, see the the end of the calendar year in which the deemed year-end
instructions on that form for a possible adjustment to falls. For example, should the deemed year-end fall on
line 24. June 3, the return and any balance payable will be due 90
days after December 31.
Form T1055, Summary of Deemed In addition to the properties referred to above, if a
Dispositions (2002 and later tax years) post-1971 testamentary spousal or common-law partner
Use Form T1055 to calculate the income, or the capital gain trust holds an AgriInvest Fund 2 that was transferred to it
or loss, from deemed dispositions. on the death of the settlor, report a deemed payment out of
the fund on the day the beneficiary spouse or common-law
Deemed disposition partner dies.
A trust is deemed to have disposed of its capital property If, after a deemed disposition that was to be reported on
(other than exempt property), land inventory, and Form T1055, the trust actually disposed of the property in
Canadian and foreign resource properties on specified the same tax year, use Schedule 1 to report the gain or loss
dates called deemed disposition days. For more from the actual disposition. If the trust is a post-1971
information about the dates, see “Deemed disposition day” spousal or common-law partner trust, a joint spousal or
on page 41. common-law partner trust, or an alter ego trust, the gain
For 2016 and subsequent years, where the primary or loss should instead be reported on Form T1055.
beneficiary of an alter ego trust, spousal or common-law If a deemed disposition occurs, the trust is considered to
partner trust, or the last surviving beneficiary of a joint have done both of the following:
spousal or common-law partner trust dies, there is a
deemed year-end of the trust on the date of death of the ■ disposed of its capital property (including depreciable
beneficiary. The income that is deemed to be recognized property of a prescribed class), land inventory, and
upon the death of the beneficiary must be reported on the Canadian and foreign resource properties at the end
trust’s T3 return filed for the deemed year-end of the trust. of the deemed disposition day, at the fair market
value (FMV)
Note
Income of the trust which became payable to the ■ reacquired them immediately after, at a cost equal to
beneficiary prior to their death is generally included in the same FMV
the amounts reported on a T3 slip to the beneficiary and For depreciable property, the trust has to report both
will be included in the beneficiary’s income in their final capital gains and recapture of capital cost allowance.
T1 return.
Use Form T1055 to calculate:
However, for 2016 and subsequent years, in the case of a
testamentary spousal or common-law partner trust, a joint ■ the adjustments to line 24 of Schedule 1
election between the trust and the deceased beneficiary’s ■ the amount of tax on which the trust can elect to defer
graduated rate estate can be filed to report the income that payment
is deemed to be recognized upon the death of the
beneficiary for the year in the beneficiary’s final T1 return. ■ the amount of taxable and deemed taxable capital gains
This income shall be reported on the T3 slip issued to the to which you can apply the trust’s net capital losses of
beneficiary. For the joint election to be valid all the other years
following requirements must be met:
Deemed disposition day
■ Immediately before death, the beneficiary was a resident
This is the day we consider the trust to have disposed of
of Canada.
its capital property, land inventory, and Canadian and
■ The trust is a testamentary trust that is a post-1971 foreign resource properties.
spousal or common-law partner trust and was created by
Generally, it is one of the following:
the will of a taxpayer who died before 2017.
■ For a spousal or common-law partner trust, the day the
■ A copy of the joint election is filed with both the final T1
beneficiary spouse or common-law partner died.
return of the beneficiary and the T3 return for the
deemed year-end of the trust. To make the election, send ■ For a joint spousal or common-law partner trust, the day
us a letter for both the final T1 return and the trust’s T3 the settlor or the beneficiary spouse or common-law
return with all of the following information: partner died, whichever is later.
– the T1 and T3 account numbers ■ For an alter ego trust, the day the settlor died, unless
the trust filed an election not to be considered an
– the income amount that was allocated in the T3 slip
alter ego trust (see the definition of alter ego trust
and reported on the final T1 return filed for the
in “Chart 1 – Types of Trusts” on page 9). If the trust has
deceased beneficiary
filed an election, the deemed disposition date will be
– the signatures, names and addresses of both the 21 years after the day the trust was created.
trustee(s) of the trust and the executor(s) for the
deceased beneficiary
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■ For a trust to which property was transferred by an The following trusts are excluded from the deemed
individual (other than a trust) where the transfer did not dispositions reported on Form T1055:
result in a change in beneficial ownership of that
■ A specified trust (as described in “Chart 1 – Types of
property and no person (other than the individual) or
Trusts” on page 9).
partnership has any absolute or contingent right as a
beneficiary under the trust, on the day the individual ■ A unit trust.
dies.
■ A trust in which all interests have been permanently
■ For other trusts, 21 years after the day the trust was vested. This exception applies primarily to those
created. commercial trusts (all trusts other than personal trusts)
that do not qualify as unit trusts. This exception does not
Subsequent deemed dispositions will occur every 21 years,
apply to any of the following:
on the anniversary of the day established above.
– a post 1971 spousal or common-law partner trust
The following deemed disposition days will not result in
another deemed disposition on the 21st anniversary of – a joint spousal or common-law partner trust or an
that deemed disposition day. Instead, the next deemed alter ego trust
disposition for such trusts will occur 21 years after the day
the trust was created or on the anniversary of a deemed – a trust to which property was transferred by an
disposition day otherwise established: individual (other than a trust) where the transfer did
not result in a change in beneficial ownership of that
■ Where a trust distributes property after property and no person (other than the individual) or
December 17, 1999, to a beneficiary in respect of the partnership has any absolute or contingent right as a
beneficiary’s capital interest in the trust and it is beneficiary under the trust
reasonable to consider that the distribution was financed
by a liability of the trust, and one of the reasons for – a trust resident in Canada that has non-resident
incurring the liability was to avoid paying taxes because beneficiaries, if the fair market value (FMV) of the
of the death of any individual, the day the property non-resident beneficiaries’ interests in the trust is more
was distributed. than 20% of the total FMV of all the interests in the
trust
■ Where an individual has transferred property (other than
real property situated in Canada, Canadian resource – a trust that distributed property after
property, or a timber resource property, property of a December 17, 1999, to a beneficiary in respect of the
business carried on by the trust through a permanent beneficiary’s capital interest in the trust and it is
establishment in Canada including capital property, reasonable to consider that the distribution was
property included in Class 14.1 (eligible capital property financed by a liability of the trust, and one of the
before January 1, 2017) in respect of or, and property reasons for incurring the liability was to avoid paying
described in the inventory of the business, or certain taxes because of the death of any individual
pension or other similar rights or interests) after – a trust under the terms of which, all or part of any
December 17, 1999, to a trust for the transferor’s spouse person’s interest is to be terminated with reference to a
or common-law partner, and it is reasonable to conclude period of time otherwise than as a consequence of
that the property was transferred knowing that the terms of the trust under which an interest in the trust is
individual planned to emigrate from Canada, the day the to be terminated as a result of a distribution to the
individual ceases to be resident in Canada. person (or the person’s estate) of property of the trust if
the FMV of the property to be distributed is
Exemption from Form T1055 deemed dispositions proportionate with the FMV of the person’s interest
When a trust is excluded from the deemed disposition rule immediately before the distribution
in paragraph 104(4)(b) (for example, all of the trust’s
interests had vested indefeasibly prior to the 21st
anniversary after the day the trust was created), or is not
reporting any deemed dispositions, a statement should be
sent to us outlining the reason(s) for not filing Form T1055.

42 canada.ca/taxes
 Summary of Options Available for Deemed Dispositions Reported on Form T1055
(subject to the provisions of the will or trust document)

Joint spousal or Other trusts and spousal

Post-1971 spousal or
Pre-1972 common-law or common-law partner
Options common-law partner
spousal trust partner and trusts 21 years after first
trust
alter ego trust deemed disposition
Gains or losses from the deemed yes yes yes yes
dispositions taxed in the trust
Rules apply to spousal and
common-law partner (and similar)
trusts – see “Deemed disposition”
on page 41.
Elect to defer tax (Form T2223) yes yes yes yes
Designate capital gains (box 21 no yes no yes
of the T3 slip)
Preferred beneficiary election no – for the deemed no – for the date no yes
disposition occurring on the spouse died
the death of the spouse
or common-law partner yes – for
subsequent
yes – for subsequent dispositions
dispositions

Form T2223, Election Under The last condition will not apply when the transfer is
Subsection 159(6.1) of the Income Tax Act, by between two trusts of the same type. For example, from one
alter ego trust to another alter ego trust.
a Trust to Defer Payment of Income Tax
The trust can elect to pay its income tax arising from the
deemed dispositions reported on Form T1055 in up to
Schedule 8 – Investment Income,
10 annual instalments. Interest at the prescribed rate will Carrying Charges, and Gross-up
apply. Use Form T2223 to make this election, and send it to Amount of Dividends Retained
your tax services office no later than the day the return is
due for the tax year the deemed disposition occurs. For by the Trust ▲
more information, call 1-800-959-8281. Lines 1 to 3 – Dividends from taxable
Canadian corporations
Transfer of trust property to another trust Send us a statement listing the actual amount of dividends
If one trust (Trust A) transfers capital property, land the trust received from taxable Canadian corporations. In
inventory, or resource property to another trust (Trust B), this statement, include actual and deemed taxable
the deemed disposition day for Trust B becomes the dividends. Do not include non-taxable dividends (see
earliest of the following dates: “Lines 7 to 12 – Other investment income” on page 44), or
■ Trust A’s deemed disposition day that would have capital gains dividends that you report on line 10 or 11 of
occurred if the transfer had not been made Schedule 1. We consider dividends credited to the trust’s
account by a financial institution to have been received by
■ Trust B’s deemed disposition day that would have the trust, even if the trust did not receive a T3 or T5 slip.
occurred if the transfer had not been made
The gross-up amount of taxable dividends received from
■ the day of the transfer if the original transfer to Trust A taxable Canadian corporations qualifies for the dividend
occurred on a rollover basis, for example, where Trust A tax credit. This may reduce the trust’s tax payable.
is one of the following: If the trust designated the taxable dividends to
beneficiaries, the tax payable by the beneficiaries may be
– a spousal or common-law partner trust, and the
reduced.
beneficiary spouse or common-law partner is still alive
at the time of the transfer The type of dividends the trust receives determines which
dividend tax credit rate it will apply to the gross-up
– a joint spousal or common-law partner trust, and the
amount of the dividends. For eligible dividends received
settlor or beneficiary spouse or common-law partner is
from qualifying taxable Canadian corporations, the rate
still alive at the time of the transfer
is 15.0198%. For dividends other than eligible dividends
– an alter ego trust, and the settlor is still alive at the time the rate is 9.0301%.
of the transfer

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Box 23 on a T3 slip and box 10 on a T5 slip show the actual Lines 13 to 17 – Carrying charges and interest
amount of dividends other than eligible dividends. Enter expenses
these amounts on line 1 of Schedule 8. Box 49 on a T3 slip
Carrying charges and interest expenses include:
and box 24 on a T5 slip show the actual amount of eligible
dividends. Enter these amounts on line 2 of Schedule 8. ■ interest on money borrowed to earn investment income
■ fees for the management or safe custody of investments
Lines 4 to 6 – Foreign investment income
Report investment income from foreign sources in ■ accounting fees for recording investment income
Canadian dollars. Calculate how much to report by ■ investment counsel fees
multiplying the foreign income by the exchange rate in
effect on the day that the trust received the income. If the Note
amount was paid at various times throughout the year, to A deduction of an amount paid or payable in respect of
get the applicable rate, go to bankofcanada.ca/rates the use of a safety deposit box of a financial institution is
/exchange, or call 1-800-959-8281. Report the full amount of not allowed.
the foreign income. Do not reduce it by the tax withheld by Do not include trustee fees paid by the trust or brokerage
foreign authorities. fees or commissions paid by the trust to buy or sell
securities. If the trust paid these expenses to purchase a
Lines 7 to 12 – Other investment income security, they are part of its cost. If the trust paid them to
Report bond interest, bank interest, mortgage interest, and sell a security, claim them as “Outlays and expenses (from
other dividends (including dividends under a dividend dispositions)” in column 4 of Schedule 1.
rental arrangement). We consider interest and dividends You can deduct interest expenses on a life insurance policy
credited to the trust’s account by a financial institution to loan if the trust used the proceeds of the loan to earn
have been received by the trust. income. If the trust elects to add the interest expense to
Report interest on tax refunds received in the year on the adjusted cost base of the policy, you cannot deduct it on
line 11. line 14 of the return. If the trust is claiming interest paid on
a policy loan during the year, the insurer has to complete
Do not include the following: Form T2210, Verification of Policy Loan Interest by the
■ dividends the trust received from taxable Canadian Insurer, no later than 90 days after the trust’s tax year-end.
corporations reported on lines 1 and 2
Lines 18 to 32 – Calculating the gross-up
■ capital gains dividends reported on line 10 or 11 of
Schedule 1
amount of dividends retained or not
designated by the trust
■ non-taxable dividends (see “Non-taxable dividends
Use this section to calculate the gross-up amount of actual
received by a trust” below)
dividends from taxable Canadian corporations included on
For more information on the method of reporting interest lines 1 and 2 that the trust retained.
and other investment income, see the General Income Tax
The gross-up rate for eligible dividends received in the
and Benefit Guide, and archived Interpretation
year is 38% of the dividends received. This calculation is
Bulletin IT-396, Interest Income.
done on lines 18 to 24.
Non-taxable dividends received by a trust The gross-up rate for dividends other than eligible
If the trust received a non-taxable dividend, do not include dividends received in 2022 is 15%. This calculation is done
it in the trust’s income. An example of a non-taxable on lines 25 to 31.
dividend is a tax-free dividend that a Canadian private The gross-up does not apply to taxable Canadian dividends
corporation pays from its capital dividend account. received by the trust if they are allocated to a non-resident
Certain non-taxable dividends that the trust received, other beneficiary.
than dividends paid out of the capital dividend account, If you have allocated dividends by including them in the
may reduce the adjusted cost base of the shares on which amount on line 926 of Schedule 9, the dividends are not
the dividends were paid. Make this adjustment when designated. Do not include them on line 19 or line 26.
calculating a capital gain or loss if the trust later disposes of
the shares. Claim the carrying charges that relate to dividends on
line 16 of Schedule 8.
If the trust pays out non-taxable dividends to its
beneficiaries, inform the beneficiaries that they should not
include these dividends in income. You also have to file a Line 19 – Eligible dividends designated to
statement with the return containing all of the following beneficiaries
information: Enter the amount of net eligible dividends, after related
expenses, that you designated to beneficiaries from line 949
■ the name of the payer corporation
of Schedule 9.
■ the names of the beneficiaries, and the amount of
non-taxable dividends that each beneficiary received

44 canada.ca/taxes
Line 21 – Eligible dividends allocated, but not For more information, see archived Interpretation
designated, to non-resident beneficiaries Bulletin IT-524, Trusts – Flow-Through of Taxable
Dividends to a Beneficiary – After 1987.
Enter the amount of net eligible dividends, after related
expenses, included in Column 2, line 926 of Schedule 9.
If the dividends have been allocated to non-resident Schedule 9 – Income Allocations and
beneficiaries on line 949, do not include them on line 21. Designations to Beneficiaries ▲
Complete this schedule if the trust is allocating income to
Line 24 – Gross-up amount of eligible its beneficiaries. You also have to complete T3 slips and a
dividends retained or not designated by the T3 Summary if you are allocating income to resident
trust beneficiaries, and NR4 slips and an NR4 Summary if you
Multiply the amount on line 22 by 38% to calculate the are allocating income to non-resident beneficiaries.
amount to enter on line 24. You have to apply the gross-up
rate to actual eligible dividends that have been retained in Allocations and designations ▲
the trust, other than those allocated but not designated to Generally, you allocate income to the trust’s beneficiaries
non-resident beneficiaries, before you deduct the related according to the terms of the will or trust document.
expenses. Depending on the type of income allocated, you may then
Enter this amount in the calculation area for line 13 of designate all or part of the allocated amount. When you
Schedule 11. designate an amount to a beneficiary, the type of income
keeps its identity. This may allow the beneficiary to take
advantage of a deduction or credit that applies to that
Line 26 – Dividends other than eligible income (such as the capital gains deduction or the dividend
dividends designated to beneficiaries tax credit).
Enter the amount of net dividends other than eligible
We define “Allocate, allocation” on page 5 and “Designate,
dividends, after related expenses, that you designated to
designation” on page 6.
beneficiaries from line 923 of Schedule 9.
You can choose to designate the following income amounts
Line 28 – Dividends other than eligible to a beneficiary:
dividends allocated, but not designated, to ■ net taxable capital gains
non-resident beneficiaries
■ certain lump-sum pension income
Enter the amount of net dividends other than eligible
dividends, after related expenses, included in Column 2, ■ dividends from taxable Canadian corporations
line 926, Part A of Schedule 9. If the dividends have been ■ foreign business income
allocated to non-resident beneficiaries on line 923, do not
include them on line 28. ■ foreign non-business income
■ pension income that qualifies for the pension income
Line 31 – Gross-up amount of dividends other amount
than eligible retained or not designated by the
■ pension income that qualifies for acquiring an eligible
trust annuity for a minor beneficiary
Multiply the amount on line 29 by 15% for 2022 for
dividends other than eligible dividends, and enter the ■ retiring allowances that qualify for a transfer to a
result on line 31. You have to apply the gross-up rate to registered pension plan (RPP) or a registered retirement
actual dividends other than eligible dividends that have savings plan (RRSP)
been retained in the trust, other than those allocated but Note
not designated to non-resident beneficiaries, before you An insurance segregated fund trust has to designate all
deduct the related expenses. of its capital gains and losses to its beneficiaries.
Enter this amount in the calculation area for line 14 of Use Part B of Schedule 9 to report designated amounts.
Schedule 11. This includes amounts such as foreign income tax paid,
a retiring allowance qualifying for transfer to an RPP and
Line 32 – Total gross-up amount of dividends an RRSP, a Part XII.2 tax credit, and other tax credits that
other than eligible retained or not designated flow through to the beneficiary.
by the trust Income allocated to a beneficiary that is not deductible
Add the gross-up amount of both the eligible dividends should not be reported on Schedule 9.
and the dividends other than eligible dividends from For more information, see the following archived
lines 24 and 31. interpretation bulletins:
Enter the result on line 30 of the return and on line 18 of ■ IT-342, Trusts – Income Payable to Beneficiaries
Schedule 12, if applicable.
■ IT-381, Trusts – Capital Gains and Losses and the
Flow-Through of Taxable Capital Gains to Beneficiaries
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■ IT-524, Trusts – Flow-Through of Taxable Dividends to a ■ the beneficiary was a non-resident of Canada at the end
Beneficiary – After 1987 of the year, or in case of a deceased beneficiary, was a
non-resident of Canada immediately before death
Split Income ■ neither of the beneficiary’s parents lived in Canada at
Tax on split income of a minor beneficiary any time in the year
If a trust (other than a communal organization or a mutual
For the 2018 and later tax year, the tax on split income will
fund trust as described in “Chart 1 – Types of Trusts” on
also not apply in respect of taxable capital gains from the
page 9) allocates certain types of income to a beneficiary
disposition of qualified farm or fishing property or
during the beneficiary's tax year and the beneficiary had
qualified small business corporation shares. This does not
not attained the age of 17 before the tax year, the
include taxable capital gains from the disposition of certain
beneficiary may have to pay a special tax (the tax on split
shares to a person that does not deal at arm’s length with
income).
the beneficiary.
The tax on split income applies to all of the following:
Tax on split income for an adult beneficiary
■ taxable dividends allocated by the trust (other than
For 2018 tax and later years, the tax on split income will
dividends from shares of a class listed on a designated
also apply to individuals over the age of 17, but only with
stock exchange and those of a mutual fund corporation)
respect to certain income derived from a related business.
■ shareholder benefits allocated by the trust (other than
For more information on the application of the tax on split
from ownership of shares of a class listed on a designated
income to adults, including information on amounts that
stock exchange)
are excluded from an adult’s split income for a tax year,
■ for taxation years before 2018, income allocated by the and guidance on how the CRA will administer those
trust that came from providing services or property to, or exclusions, go to canada.ca/cra-income-sprinkling.
in support of, a business operated by:
How to report split income
– a person who is related to the beneficiary at any time in
the year If the trust is allocating “split income” to a beneficiary, you
have to inform the beneficiary that they may have to pay
– a corporation that has a specified shareholder who is the special tax. Follow the instructions for completing
related to the beneficiary at any time in the year Schedule 9 – Income Allocations and Designations to
Beneficiaries on page 45 and the T3 slip on page 64. Attach
– a professional corporation that has a shareholder who
a statement to the T3 slip showing the type and amount
is related to the beneficiary at any time in the year
of the beneficiary’s share of the split income. Advise the
■ for 2018 and later years, income allocated by the trust beneficiary in writing that they must complete Form T1206,
that is derived directly or indirectly from one or more Tax on Split Income.
related businesses
Note
■ income allocated by the trust from the rental of property The attribution rules discussed in the next section
by a partnership or trust, if a person who is related to the “Transfers and loans of property” do not apply to
beneficiary at any time in the year is actively engaged on property that is subject to split income rules.
a regular basis in the activity of the partnership or trust
of earning that income Transfers and loans of property
■ for 2018 and later years, a taxable capital gain, or a profit, Special rules may apply to amounts from a property that,
allocated by the trust from the disposition of property the under certain conditions, is held by the trust or is
income of which would be “split income” of the transferred or loaned to the trust. We refer to a person who
beneficiary if they received it directly has loaned or transferred property as the “transferor.”
■ deemed dividends that result from capital gains of a trust A transferor, who is alive and resident in Canada, may lend
from the disposition of shares (other than shares of a or transfer property to the trust for the benefit of:
class listed on a designated stock exchange or those of a
■ the transferor’s spouse or common-law partner, or a
mutual fund corporation) that are transferred to a person
person who has since become the transferor’s spouse or
who is not at arm’s length with the beneficiary
common-law partner
The tax on split income does not apply if:
■ the transferor’s related minor (such as a child,
■ the income is from property the beneficiary inherits from grandchild, sister, brother, niece, or nephew under
either: 18 years of age at the end of the year)
– a parent In either case, any income or loss from that property may
have to be reported on the transferor’s return.
– any other individual, if the beneficiary is either
enrolled as a full time student during the year, in a Note
post-secondary educational institution or qualifies for The transferor does not have to report the income of the
the disability tax credit for the year trust if the related minor turns 18 years of age before the
end of the year.

46 canada.ca/taxes
The transferor may also have to report taxable capital gains – for a joint spousal or common-law partner trust, the
or allowable capital losses from the disposition of property settlor or the beneficiary spouse or common-law
loaned or transferred to a trust for the benefit of the partner while either one of them is alive
transferor’s spouse or common-law partner, or a person
– for an alter ego trust, the settlor while the settlor is
who has since become the transferor’s spouse or
alive
common-law partner.
■ A post-1971 spousal or common-law partner trust, joint
The property may have been sold to the trust at its fair
spousal or common-law partner trust, or alter ego trust
market value, or loaned to the trust at a prescribed rate of
cannot deduct the allocation of any income realized from
interest, which was paid within 30 days of the tax year-end.
deemed dispositions of capital property, land inventory
If this is the case, any income or loss, or any taxable capital
of the trust’s business, and Canadian and foreign
gain or allowable capital loss, from that property is
resource property that arose on the death of one of the
generally income of the trust. For this income, issue the
following:
T3 slip to the beneficiary, not to the transferor.
– for a post-1971 spousal or common-law partner trust,
An individual can receive a low-interest or interest-free
the beneficiary spouse or common-law partner
loan from a trust to which another individual transfers
property. If the two individuals do not deal at arm’s length, – for a joint spousal or common-law partner trust, the
you will normally be required to report the income from settlor or the beneficiary spouse or common-law
that loaned property or any property substituted for it on partner, whichever is later
the trust’s return. This is not the case if the income is
attributable to another individual. This also applies to an – for an alter ego trust, or a trust to which property was
arm’s length commercial loan that the individual uses to transferred by an individual (other than a trust) where
repay the original low-interest or interest-free loan. the transfer did not result in a change in beneficial
ownership of that property and no person (other than
If the trust’s terms are such that the transferred property the individual) has any absolute or contingent right
may revert to the transferor, or if the transferor keeps a as a beneficiary under the trust, the day on which the
certain degree of control over the property, see “Exceptions death of the individual occurs
and limits to income allocations” below.
– for the deemed payment from an AgriInvest Fund 2,
If the income from loaned or transferred property is to be the beneficiary spouse or common-law partner
included on the transferor’s return, you generally have to
report it on the trust’s return. Issue a T3 slip reporting the ■ The trust cannot deduct income from payments out of an
income as that of the transferor. AgriInvest Fund 2 unless one of the following conditions
are met:
For more information about transfers and loans of property,
see Guide T4037, Capital Gains, and the following archived – the trust is a testamentary spousal or common-law
interpretation bulletins: partner trust and this income was received while the
beneficiary spouse or common-law partner was alive
IT-286 Trusts – Amount Payable
– the trust is a communal organization
IT-369 Attribution of Trust Income to Settlor, and its
Special Release ■ Under subsection 75(2) of the Act, certain inter vivos
trusts resident in Canada and which were created
IT-510 Transfers and Loans of Property Made After after 1934 may have property (or property substituted for
May 22, 1985 to a Related Minor it) that:
IT-511 Interspousal and Certain Other Transfers and – may revert to the contributor
Loans of Property
– may be distributed to beneficiaries determined by the
contributor at a time after the trust was created
Exceptions and limits to income allocations
Generally, trust income is allocated to beneficiaries, or – may only be disposed of with the consent of, or at the
taxed in the trust, according to the provisions of the will or direction of, the contributor while the contributor is
trust document, with the following exceptions and limits: alive or exists

■ A post-1971 spousal or common-law partner trust (other Certain related amounts, including taxable capital gains
than one created before December 21, 1991), joint spousal and allowable capital losses from that property or the
or common-law partner trust, or alter ego trust cannot substituted property, are considered to belong to the
deduct amounts payable in a tax year to anyone except contributor during the contributor’s life or existence
one of the following: while a resident of Canada. The trust must still report
the amount on the trust’s T3 return and issue a T3 slip
– for a trust that was a post-1971 spousal or common-law reporting the amount as that of the contributor of the
partner trust on December 20, 1991, or a spousal or property. For more information, see archived
common-law partner trust created after Interpretation Bulletin IT-369, Attribution of Trust
December 20, 1991, the beneficiary spouse or Income to Settlor, and its Special Release.
common-law partner, while the beneficiary spouse
or common-law partner is alive The attribution rules in subsection 75(2) apply only in
respect of property held by a trust that is factually

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 resident in Canada. However, similar provisions exist in ■ For tax years that end after March 4, 2010, a resident
section 94 to apply to trusts that are deemed resident. contributor to a deemed resident trust may elect to
Contact the Winnipeg Tax Centre at one of the numbers include in computing their income, a portion of the
listed at page 20 for more information on how these rules income earned by the trust. Generally, this portion is
apply. equal to the amount of the resident contributor’s
contribution to the trust as a percentage of all
■ A trust cannot allocate capital losses and non-capital
contributions made by all resident and connected
losses to beneficiaries of a trust except:
contributors. The amount included in the electing
– capital losses, if it is an insurance-related segregated contributor’s income will be deemed to be income from
fund trust property from a source in Canada, unless the amount is
designated by the trust under paragraph 94(16)(c).
– losses of revocable trusts and from blind trusts. Report
these losses in brackets in the appropriate box on a A valid election must be filed in writing, on or before the
separate T3 slip for the beneficiary. Clearly indicate contributor’s filing due date for the first tax year for
the type of loss in the footnote area below box 26 on which the election is to take effect. A valid election must
the T3 slip also include the trust’s Canadian tax account number,
and proof that the contributor has notified the trust of the
■ We consider income that was not paid or payable to a contributor’s intention to become an electing contributor
beneficiary to be allocated (as defined on page 5) to a no later than 30-days after the trust’s tax year that ends in
beneficiary if they have a vested right to its income, and: the initial year. This is an irrevocable election. Once a
– the trust is resident in Canada throughout the year resident contributor has chosen to become an electing
contributor, they will continue to be an electing
– the beneficiary is under 21 years of age at the end of contributor for all subsequent tax years.
the year
The trust may deduct, from its income for the tax year, an
– the beneficiary’s right to income is vested by the end amount equal to the amount included in calculating the
of the year, it did not become vested due to the exercise electing contributor’s income as a result of this election.
or non-exercise of a discretionary power by any The trust must still report the amount on the trust’s T3
person, and it is not subject to any future condition return and issue a T3 slip reporting the amount as that of
other than the condition that the beneficiary survive to the electing contributor of the property. For more
an age of not more than 40 years information, contact the Winnipeg Tax Centre at one of
■ The amount of income that can be allocated to a the numbers listed on page 20.
beneficiary may be limited if:
Income to be taxed in the trust ▲
– a beneficiary’s share of the income of the trust is less
than their capital interest in the trust You can choose to report income on the trust return, rather
than report it in the hands of the beneficiaries, as long as
– the beneficiary is a designated beneficiary as described the trust is:
on page 54 and the trust was not resident in Canada
throughout the tax year ■ resident in Canada throughout the year

■ When a trust resident in Canada distributes property to a ■ not exempt from tax
beneficiary and the trust realizes a capital gain, the trust ■ not a specified trust (as defined in “Chart 1 – Types of
can elect to treat the income as taxable in the trust. That Trusts” on page 9)
is, the taxable capital gain will not be considered payable
to the beneficiary if the trust: This applies to income paid or payable to beneficiaries.

– was resident in Canada when it distributed the You make this choice by indicating on line 27 of the T3
property return for the year that you are making a designation
under subsection 104(13.1). Once you make this choice,
– filed an election with its T3 return for the year, or a you cannot deduct on line 28 the income designated in
preceding tax year, in which the property was the election. An example of when you might use this
distributed designation is in a year when a trust has taxable income
The election can be made for distributions to all and a non-capital loss carry forward.
beneficiaries or only for distributions to non-resident Once you make the choice, you have to make it for each
beneficiaries. The trust may have filed such an election beneficiary. It reduces a beneficiary’s income from the trust
in the current year or any preceding year. If this is the by that beneficiary’s proportionate share of the income
case, calculate the trust’s income available for allocation reported on the trust’s return. We show you how to
to a beneficiary without taking into consideration any calculate the proportionate share in the following section.
gains realized on the distribution of property to
beneficiaries covered by the election while the trust was You can make a similar designation under
resident in Canada. subsection 104(13.2) if taxable capital gains are included
in the income reported on the trust’s return. This will
■ A deemed resident trust is limited in the amounts that it reduce the beneficiary’s taxable capital gains from the trust
can allocate to non-resident beneficiaries. For more by that beneficiary’s proportionate share of taxable capital
information, contact the Winnipeg Tax Centre at one of gains reported on the trust’s return.
the numbers listed on page 20.

48 canada.ca/taxes
An example of when you might want to make the under subsection 104(13.2), against which the losses are
subsection 104(13.2) designation is when you are able to use applied.
the trust’s non-capital loss or net capital loss carry forward
Determine the amount designated under
to absorb the current-year taxable capital gain.
subsection 104(13.1) for Josh as follows:
Generally, amounts designated under subsections 104(13.1)
and 104(13.2) will reduce the adjusted cost base of a A÷B×C
beneficiary’s capital interest in the trust unless the interest $3,000 ÷ $6,000 × $5,000 = $2,500
was acquired for no consideration and the trust is a
personal trust. Therefore, the amount designated for Josh is $2,500.
Because Ashley shares equally, her calculation is the same.
If you choose to designate any portion of the beneficiary’s
income to be reported on the trust return: Determine the amount designated under
subsection 104(13.2) for Josh as follows:
■ enter the amount on line 27 of the return
A÷B×C
■ send us a statement showing the income you are
designating and the amounts you are designating for $1,500 ÷ $3,000 × $1,000 = $500
each beneficiary
Therefore, the amount designated for Josh is $500. Because
Designations under subsections 104(13.1) and (13.2) to Ashley shares equally, her calculation is the same.
retain and tax income or capital gains in the trust are
restricted after 2015 as a result of subsection 104(13.3).
Subsection 104(13.3) ensures that these designations are Preferred beneficiary election
made only to the extent that the trust has a nil taxable A trust and a preferred beneficiary can jointly elect, in the
income for the year in which the designation is made. year, to include in a preferred beneficiary’s income for that
year, all or part of the trust’s accumulating income for the
Proportionate share formulas year. You can deduct the elected amount from the trust’s
Use the following formulas to calculate designations under income, up to the amount of the accumulating income. The
subsections 104(13.1) and 104(13.2). You have to apply these elected amount for a preferred beneficiary must not be
formulas to each beneficiary. A trust cannot use these more than the allocable amount of the trust’s total
designations to tax one beneficiary’s share in the trust and accumulating income. We define “Preferred beneficiary” on
allocate another share to a beneficiary unless the trust page 7.
agreement entitles one beneficiary to the trust’s income and
another beneficiary to the trust’s capital. The preferred beneficiary election cannot be made by the
trusts listed under “Exemption from Form T1055 deemed
Subsection 104(13.1) dispositions” on page 42.
A÷B×C For the trusts listed below, you can only make the election
where: for the following:
A = beneficiary’s share of trust income (calculated without ■ a spousal or common-law partner trust, in respect of the
reference to the Act) beneficiary spouse or common-law partner while the
B = total of amount A for all beneficiaries beneficiary spouse or common-law partner is alive
C = trust income designated under subsection 104(13.1) ■ a joint spousal or common-law partner trust, in respect of
the settlor or the beneficiary spouse or common-law
Subsection 104(13.2) partner while either of them is alive
A÷B×C ■ an alter ego trust, in respect of the settlor while the settlor
where: is still alive
A = beneficiary’s share of the taxable capital gains of the A trust’s accumulating income for the year is generally its
trust calculated under the Act income for the year after deductions, but without regard
B = total of amount A for all beneficiaries to amounts allocated under preferred beneficiary elections.
C = net taxable capital gains designated under Accumulating income does not include the income from
subsection 104(13.2) the deemed disposition of capital property, land inventory,
or resource property on the death of:

Example ■ the beneficiary spouse or common-law partner, for a

A trust’s income is $9,000: investment income of $6,000 and spousal or common-law partner trust
taxable capital gains of $3,000. Both are shared equally ■ the settlor or the beneficiary spouse or common-law
between the trust’s two beneficiaries, Josh and Ashley. partner, whichever is later, for a joint spousal or
The trust has $6,000 in losses from prior years to apply: a common-law partner trust
non-capital loss of $5,000 and a net capital loss of $1,000.
Therefore, the trustee decides to report $6,000 of income on ■ the settlor, for an alter ego trust
the trust return by designating $5,000 under Accumulating income also does not include income arising
subsection 104(13.1) and $1,000 of taxable capital gains from the deemed disposition of property to a beneficiary
49
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that results in a disposition of all or part of the beneficiary’s If you are making a preferred beneficiary election, see
capital interest in the trust, when the property is distributed archived Interpretation Bulletin IT-394, Preferred
to a beneficiary other than all of the following: Beneficiary Election.
■ the beneficiary spouse or common-law partner for a
Preferred beneficiary election and the qualified
post-1971 spousal or common-law partner trust if the
disability trust election
beneficiary spouse or common-law partner is alive
The introduction of the qualified disability trust (QDT)
■ the settlor or the beneficiary spouse or common-law provisions has not restricted the availability of the
partner, for a joint spousal or common-law partner trust preferred beneficiary election, nor have there been any
if either of them is alive changes to the method in which a preferred beneficiary
election is made. Many of the requisite conditions for
■ the settlor, for an alter ego trust, if the settlor is alive
making a preferred beneficiary election differ from those
Accumulating income of a trust does not include amounts required for a trust to be a QDT. Accordingly, where the
paid or deemed to have been paid from an AgriInvest respective conditions of each election are met, the trust has
Fund 2. However, a preferred beneficiary election can the ability to choose whether to make a preferred
include these amounts paid to a testamentary spousal or beneficiary election or a QDT election. It is also possible for
common-law partner trust while the beneficiary spouse or a trust which elects to be a QDT to also make a preferred
common-law partner was still alive. beneficiary election (jointly with the beneficiary) in a given
tax year.
Note
Accumulating income is calculated as if you have
deducted the maximum amount of income that became How to complete Schedule 9 ▲
payable in the year to the beneficiaries. Report allocated income using the columns provided:
You can make a preferred beneficiary election for a tax year Column 1 – income paid or payable to resident
by filing the following: beneficiaries
■ a statement making the election for the year, stating the Column 2 – income paid or payable to non-resident
part of the accumulating income on which you are beneficiaries
making the election, and signed by both the preferred
Column 3 – income allocated by a preferred beneficiary
beneficiary (or guardian) and the trustee with the
election
authority to make the election
For more information, see the appropriate column heading
■ a statement signed by the trustee showing the calculation
in the following sections. Any amounts allocated to a
of the amount of the beneficiary’s share of the
beneficiary on lines 921 to 926 and on line 949 are generally
accumulating income, and indicating the beneficiary’s
deducted from the trust’s income.
social insurance number, their relationship to the settlor
of the trust, and whether one of the following conditions Before allocating income to the beneficiaries, you must
is met: first take into consideration the trust’s expenses. If the trust
claimed expenses on line 20 of the T3 return, deduct them
– the beneficiary is claiming a disability amount
from the specific source of income to which the expense
– a supporting individual is claiming a disability amount relates. If the expense relates to more than one source of
for that beneficiary (if yes, provide the name, address, income, you must divide it between the applicable sources
and social insurance number of the supporting of income. The trust can then allocate the remaining income
individual) to the beneficiaries.
– the beneficiary is 18 years of age or older, and in the Column 1 – Resident ▲
beneficiary’s tax year that ends in the trust’s tax year,
Include in this column, allocations and designations of
another individual can claim an amount for an infirm
income paid or payable to resident beneficiaries. If the
dependant age 18 or older for that beneficiary, or could
income is allocated, but no amounts are designated, enter
claim the amount if the beneficiary’s income is
the total amount on line 926. If you are designating the
calculated before including the income from the
income, enter the amounts on the appropriate lines. In
preferred beneficiary election. If this is the case,
addition, use Part B for other amounts you are designating
provide a statement from the medical practitioner
to the beneficiaries.
confirming the beneficiary’s impairment in the
first year the claim is made For more information, see:
File the election with the return or separately, no later ■ “Allocations and designations” on page 45
than 90 days after the end of the trust’s tax year for which
■ archived Interpretation Bulletin IT-286, Trusts – Amount
the election was made. For a preferred beneficiary election
Payable
to be valid, you have to file it on time. If you file the
election late, we will tax the accumulating income in the ■ archived Interpretation Bulletin IT-342, Trusts – Income
trust. For more information regarding late-filed or Payable to Beneficiaries
amended elections, see “Elections” on page 22.

50 canada.ca/taxes
Column 2 – Non-resident ▲ (which includes, amounts that are deemed to be taxable
Include in this column, allocations and designations of capital gains to the trust for the year), is more than the total
income paid or payable to non-resident beneficiaries. If the of:
income is allocated, but no amounts are designated, enter ■ the trust’s allowable capital losses for the tax year
the total amount on line 926. Report the total of the (except, allowable business investment losses)
amounts in column 2 as estate or trust income on an
NR4 slip, not on a T3 slip. ■ net capital losses of other years deducted in calculating
the trust’s taxable income for the tax year
Most amounts paid or payable to non-resident beneficiaries
are subject to a Part XIII withholding tax. For more When calculating the maximum net taxable capital gains
information, see “Part B – Calculating Part XIII available for designation in the current year, you have to
non-resident withholding tax” on page 55. Enter the total reduce the net taxable capital gains (as calculated above) by
of column 2 on line 15 of Schedule 10. both of the following:

If you allocate certain income to non-resident beneficiaries, ■ Any expenses the trust incurred to earn income included
the trust may also be subject to Part XII.2 tax. When on line 1 of the return.
allocating such income, include the full amount before ■ Amounts designated under subsection 104(13.2) to be
deducting Part XII.2 tax. For more information, taxed in the trust, other than amounts for which a
see “Schedule 10 – Part XII.2 Tax and Part XIII deduction has been claimed on line 34. For more
Non-Resident Withholding Tax” on page 53. information, see “Income to be taxed in the trust”
on page 48.
Column 3 – By preferred beneficiary
Note
election ▲ If the amount on line 1 includes any deemed taxable
A trust and a preferred beneficiary can jointly elect to have capital gains (including gifts of capital property), call
the trust’s accumulating income taxed in the hands of the 1-800-959-8281 for more information.
preferred beneficiary. Use column 3 to allocate and
designate the elected accumulating income. Complete a You have to include both of the following in the amounts
separate T3 slip for this income. you enter on line 921:

You can designate all of the following types of income ■ capital gains distributions designated as payable by a
under a preferred beneficiary election: mutual fund trust to a non-resident beneficiary

■ taxable capital gains (line 921) ■ net taxable capital gains allocated by a trust governed by
an employee benefit plan
■ actual amount of dividends from taxable Canadian
corporations, both eligible dividends (line 949) and If you complete line 921 and you are allocating capital gains
dividends other than eligible dividends (line 923) eligible for the capital gains deduction, you also have to
complete line 930. The only taxable capital gains eligible for
■ foreign business income (line 924) this deduction are from the disposition of qualified farm or
fishing property made after May 1, 2006, and qualified
■ foreign non-business income (line 925)
small business corporation shares.
You have to make the designations on the trust’s return for
the year in which you include the relevant amounts in the Line 922 – Lump-sum pension income ▲
trust’s income. If the income is allocated but no amounts In a year throughout which a testamentary trust was a
are designated, enter the total amount on line 926. If you resident of Canada, it can designate to a beneficiary all of
are designating the income, enter the amounts on the the following:
appropriate lines. In addition, use Part B for other amounts
■ certain pension income
you are designating to the beneficiaries.
■ superannuation benefits
Part A – Total income allocations and
designations to beneficiaries ■ amounts received from a deferred profit sharing plan
Lines 921 to 928 and 949 ▲ Complete Schedule 7, Pension Income Allocations and
Answer all seven questions, and send us any necessary Designations. Enter on line 922, those amounts from
statements. For information about income attributed to Schedule 7 that qualify for a transfer to a registered
the transferor, see “Transfers and loans of property” on pension plan or a registered retirement savings plan.
page 46.
Line 923 – Actual amount of dividends
Line 921 – Taxable capital gains ▲ other than eligible dividends ▲
You can allocate all or part of a Canadian resident trust’s Enter on this line the trust’s actual amount of dividends
net taxable capital gains to a beneficiary. If you designate other than eligible dividends designated to beneficiaries of
this amount, we consider it to be the beneficiary’s taxable the trust in the year.
capital gain.
A trust’s net taxable capital gain is the amount by which
the total of the trust’s taxable capital gains for a tax year
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Line 924 – Foreign business income ▲ ■ the amount on line 30 of Schedule 3
Enter on line 924 the trust’s foreign business income
designated to the beneficiaries in the year. Line 931 – Qualifying pension income ▲
Enter those amounts from Schedule 7, Pension Income
Line 925 – Foreign non-business income Allocations and Designations, that qualify for the pension
Enter all foreign non-business income designated to income amount. You can make this designation only if the
beneficiaries. This may include income from a foreign beneficiary was the spouse or common-law partner of the
pension or interest from foreign sources. deceased, and if the trust received the benefits of a life
annuity from a superannuation or pension plan.
Line 926 – Other income ▲
Line 932 – Taxable amount of dividends other
Enter on this line all income allocated to beneficiaries that is
not shown on lines 921 to 925 or line 949. This includes
than eligible dividends ▲
business, farming, fishing, or rental income, interest or If you are designating dividends other than eligible
pension income (other than from foreign sources and dividends to a beneficiary who is either an individual
lump-sum pension income included on line 922), death or a trust (other than a registered charity), enter the result
benefits, retiring allowances, and dividends under a of the amount from line 923 multiplied by 1.15.
dividend rental arrangement. Include the amount of any
taxable benefits to resident beneficiaries under the trust, Line 933 – Foreign business income tax paid
unless the amounts are included on lines 921, 923 or 949. Enter the trust’s foreign business income tax paid and
Note designated to the beneficiaries of the trust in the year on
The total of the taxable benefits included on lines 921, line 933.
923, 926 and 949 should be the same as the total taxable
benefits reported on line 24 of the T3 return. Line 934 – Foreign non-business income
A graduated rate estate may be able to designate, in a year tax paid
throughout which it was a resident in Canada, a lump-sum If you are designating a foreign tax credit to a beneficiary,
payment out of a registered pension plan to a beneficiary to you have to submit an official receipt or information slip
acquire an annuity. Include these amounts from Schedule 7, from the foreign country. This is necessary to support the
Pension Income Allocations and Designations, on line 926. claim that the trust paid foreign non-business income tax,
Show on line 946 the amount that qualifies for a transfer. or that it was withheld from foreign non-business income
the trust earned.
Line 949 – Actual amount of eligible The portion of foreign taxes you designate to a beneficiary
dividends ▲ has to be in proportion to the foreign income you designate
Enter the actual amount of net eligible dividends, after to that beneficiary. You have to convert any foreign taxes
related expenses, designated to beneficiaries in the year. paid in foreign currency to Canadian funds.
For more information, see Income Tax Folio S5-F2-C1,
Line 928 – Totals ▲ Foreign Tax Credit, archived Interpretation Bulletin IT-201,
The total of lines 921 to 926, plus line 949 is the income Foreign Tax Credit – Trusts and Beneficiaries, and
allocated to the beneficiaries. The amount cannot be more see “Line 23 – Federal foreign tax credit” on page 57.
than “Income before allocations” on line 25 of the return.
Line 935 – Eligible death benefits ▲
Part B – Summary of other amounts A testamentary trust may receive a payment as a result of
designated to beneficiaries the employee’s death to recognize the employee’s service in
Lines 930 to 951 ▲ an office or employment. Such a payment is usually from
Complete this area only when there are designations, such the deceased person’s employer or from a trust fund the
as dividends from taxable Canadian corporations, foreign employer established. This payment may qualify as a death
taxes paid for credit purposes, and pension income or benefit, and the trust may be able to exclude up to $10,000
retiring allowances qualifying for a transfer. of the amount from income.
If you allocate the total death benefit to a single beneficiary
Line 930 – Taxable capital gains eligible for according to the provisions of the will, the beneficiary may
deduction be able to exclude up to $10,000 of the payment from
income. Enter on line 935, the amount from line 926 eligible
A personal trust that makes a designation on line 921 and for this exclusion.
has eligible taxable capital gains, also has to designate a
portion of the trust’s eligible taxable capital gains to the If you allocate the total death benefit to more than one
beneficiary for the beneficiary’s capital gains deduction. beneficiary, apportion the amount eligible for this exclusion
among those beneficiaries. The total eligible amount
Calculate the trust’s eligible taxable capital gains on apportioned cannot exceed $10,000. The beneficiaries can
Schedule 3. Enter on line 930, the lesser of the following use this information to calculate the taxable portion that
amounts: they have to report on their T1 returns.
■ the amount on line 921

52 canada.ca/taxes
If you exclude the eligible death benefit from the trust’s Line 945 – Other credits
income, only the taxable portion flows out to the Research and development tax credit
beneficiary. Report only the taxable portion of the death
This credit is available to a trust resident in Newfoundland
benefit on line 11 of the T3 return. For more information,
and Labrador, or Yukon. Enter the amount of this credit
see “Line 11 – Other income” on page 27.
that you designated to a beneficiary and did not deduct
on page 4 of the return. For more information, see
Line 937 – Insurance segregated fund net “Line 68 – Total other credits” on page 32.
capital losses
Enter the designated portion of net capital losses from the Line 946 – Pension income qualifying for an
disposition of property by an insurance segregated fund. eligible annuity for a minor ▲
Enter those amounts from Column D of Schedule 7,
Line 938 – Part XII.2 tax credit Pension Income Allocations and Designations, that qualify
Calculate the amount for line 14 of Schedule 10, and enter for an eligible annuity for a minor on line 946.
it here. Generally, you can designate the Part XII.2 tax
credit only to those resident beneficiaries to whom you Line 947 – Retiring allowance qualifying for
allocated income in column 1 of line 928, Schedule 9. transfer to an RPP or an RRSP
Enter any retiring allowance eligible for a transfer to
Line 939 – Dividend tax credit for dividends an RPP or an RRSP on line 947.
other than eligible dividends ▲
Enter the result of the amount from line 932 multiplied Line 948 – Eligible amount of charitable
by 9.0301%. donations
Enter charitable donations designated to the beneficiaries
Lines 940 and 941 – Investment tax of a communal organization on line 948.
credit (ITC)
For 2016 and subsequent years, only graduated rate estates Line 950 – Taxable amount of eligible
and communal organizations that are deemed to be dividends ▲
inter vivos trusts can designate an ITC to their beneficiaries.
If you are designating eligible dividends to a beneficiary
Complete Part A of Form T2038(IND), Investment Tax who is either an individual or a trust (other than a
Credit (Individuals), to calculate the amount of the registered charity), enter the result of the amount from
investment cost or expenditure and the ITC available. You line 949 multiplied by 1.38.
will need the eligible amounts the trust invested to acquire
property and the eligible expenditures for this part of the Line 951 – Dividend tax credit for eligible
form.
dividends ▲
You have to reduce the trust’s ITC by any amount allocated Enter the result of the amount from line 950 multiplied
to beneficiaries. by 15.0198%.
Enter the beneficiaries’ share of the trust’s investment cost
or expenditures on line 940. You need this amount to Schedule 10 – Part XII.2 Tax and
determine the amount of the ITC you can designate to
each beneficiary.
Part XIII Non-Resident Withholding Tax
Complete Schedule 10 if the trust is allocating income to
Enter on line 941, the amount of the trust’s ITC from designated beneficiaries where the trust has specified
Form T2038(IND) that you designated to a beneficiary and income (see the next section for details). The total of
did not deduct on line 26 of the trust’s Schedule 11. Part XII.2 and Part XIII tax is approximately equal to the
Part I tax, plus provincial or territorial taxes, that would
Line 942 – Amount resulting in cost base apply to the income if the beneficiaries were resident in
adjustment Canada.
Enter the amount by which the cost base of a beneficiary’s Tax tip
interest in the trust may be reduced or increased. If the trust is a non-resident trust with investments in
Note Canadian mutual funds, it may have paid Part XIII.2 tax
If you issued new units to a beneficiary in satisfaction of during the tax year. The trust may be eligible to claim a
a distribution of income, do not include that amount refund of this tax. The trust may also qualify if it realized
here. Instead, advise the beneficiary that you have issued a Canadian mutual fund loss during the tax year. If this
these units, as well as the number of units and their applies to you, see Form T1262, Part XIII.2 Tax Return
value. for Non-Resident’s Investments in Canadian
Mutual Funds.

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Part A – Calculating Part XII.2 tax and the particular trust after October 1, 1987 directly or indirectly
refundable Part XII.2 tax credit – Lines 1 to 14 from a beneficiary under the trust. For example, there are
two exceptions to this rule. A person exempt from Part I
Pay any Part XII.2 tax no later than 90 days after the trust’s
tax is not a designated beneficiary if:
tax year-end.
– the interest has been owned continuously since the
Part XII.2 tax applies when a trust meets all of the
later of October 1, 1987 and the date on which the trust
following conditions:
was created, by persons who were exempt from Part I
■ has specified income as described on page 54 tax on all of their taxable income under
subsection 149(1)
■ has a designated beneficiary as described on page 54
– the person is a trust governed by an RRSP or RRIF that
■ allocates or designates any of its income acquired the interest directly or indirectly from an
Part XII.2 tax does not apply to a trust that was one of the individual, the spouse or common-law partner, or
following throughout the year: former spouse or common-law partner of the
individual who was, a beneficiary under the trust
■ a graduated rate estate governed by the plan or fund
■ a mutual fund trust ■ another trust if any of its beneficiaries is either a trust or
■ a specified trust (as defined in “Chart 1 – Types of a designated beneficiary
Trusts” on page 9), unless the trust is a related ■ a partnership if any of its members is either a partnership
segregated fund trust, a retirement compensation or would be a designated beneficiary if that member held
arrangement trust, a trust whose direct beneficiaries are an interest in a trust
specified trusts, a trust governed by an eligible funeral
arrangement, a cemetery care trust and, in certain A designated beneficiary does not include any of the
circumstances, an amateur athlete trust following:

■ a trust that was exempt from Part I tax under ■ a mutual fund trust resident in Canada
subsection 149(1) of the Act ■ a graduated rate estate
■ a non-resident trust ■ an RRSP or RRIF that acquired its interest directly or
■ a deemed resident trust indirectly from its beneficiary, the beneficiary’s spouse or
common-law partner, or former spouse or common-law
Specified income partner
Specified income of a trust generally means its taxable ■ an entity that is exempt from Part I tax if its interest
capital gains or allowable capital losses from the in the trust has been owned continuously since
disposition of taxable Canadian property, certain property October 1, 1987, or the date on which the trust was
transferred to a trust in contemplation of a person created, by one or more entities that are exempt from
beneficially interested in the trust ceasing to be resident in Part I tax under subsection 149(1)
Canada, and the total income (or loss) from all of the
following sources: ■ a partnership, which would otherwise be a designated
beneficiary, where no members of the partnership are
■ businesses carried on in Canada designated beneficiaries and the partnership’s interest
■ real or immovable properties located in Canada, such as in the trust has never been held by anyone other than the
land or buildings partnership or an entity that is exempt from Part I tax
under subsection 149(1)
■ Canadian timber resource properties
■ a trust, the beneficiaries of which are all either trusts that
■ Canadian resource properties the trust acquired have no designated beneficiaries, or persons who are not
after 1971 designated beneficiaries
Note A designated beneficiary is usually not entitled to the
Although the term designated income is used in refundable tax credit for Part XII.2 tax that the trust paid.
Part XII.2, we use specified income in this guide and This means that you will generally not complete box 38 on
on Schedule 10 to avoid confusion with the term the T3 slip for a designated beneficiary who is a Canadian
“designated income” used in other parts of this guide. resident. Also, before you calculate Part XIII non-resident
withholding tax, you have to reduce the income payable to
Designated beneficiary a non-resident beneficiary by the non-resident’s share of the
Subject to all of the exclusions listed below, for the purpose Part XII.2 tax. For more information, see “Line 13 –
of Part XII.2 tax, a designated beneficiary under a particular Adjustment for Part XIII tax purposes” on page 55.
trust at any time, includes:
Eligible beneficiary
■ a non-resident person
This term is used for a beneficiary who is not a designated
■ a person who is exempt from Part I tax on all or part of beneficiary as described on page 54. An eligible beneficiary
their taxable income under subsection 149(1), where that is generally a Canadian resident who is entitled to a
person acquired an interest as a beneficiary under the refundable Part XII.2 tax credit in proportion to the share of

54 canada.ca/taxes
allocated or designated trust income. You have to include Part B – Calculating Part XIII non-resident
an amount equal to the Part XII.2 tax credit in the income withholding tax – Lines 15 to 27
allocated to the beneficiary. In effect, this credit replaces the
Complete this part if the trust allocated income to
income that the beneficiary would have received if the trust
non-resident beneficiaries.
did not have to pay Part XII.2 tax.

Line 6 – Total specified income Line 18 – Taxable capital gains distributions

designated as payable by a mutual fund trust
This is the total of lines 1 to 5, which represents the
specified income of the trust. Part XII.2 tax does not apply After March 22, 2004, a mutual fund trust that designates
if the amount on line 6 is negative. more than 5% of its capital gains distributions to
non-resident beneficiaries (including any partnership that
is not a Canadian partnership) must do an additional
Lines 7, 8, 10, and 11 – Adjusted amounts calculation for line 18. If this applies to the trust, complete
allocated and designated to beneficiaries lines 28 to 47 at the bottom of Part B. Enter the amount from
Enter on line 7, the amount from column 1 of line 928, line 43 of Schedule 10 on line 18.
Schedule 9. Enter on line 8, the amount from column 2 of
line 928, Schedule 9. Enter on line 10, the taxable benefits Line 20 – Amounts not subject to Part XIII
you reported on line 23 of the return.
tax: Other
Line 11 represents both of the following amounts: One example of an amount to enter on this line is an
■ the deduction from trust income for the portion of the amount you paid or credited to a beneficiary resident in the
trust’s income you allocated to resident and non-resident United States, when the amount is derived from income
beneficiaries, to be included in their income sources outside Canada and it is not subject to withholding
tax under the Canada – U.S. Tax Convention.
■ the deduction from trust income for the Part XII.2 tax the
trust paid for the year Line 21 – Part XII.2 tax amount
Withhold the Part XII.2 tax from income you distribute to On this line, enter the amount from line 13, which is
the beneficiaries. the amount of Part XII.2 tax you attribute to designated
beneficiaries.
Line 12 – Part XII.2 tax payable
Multiply by 40%, the lesser of the amount on line 6 and the Line 23 – Taxable Canadian property gains
amount on line 11. Enter the result on line 46 of the return. distributions for non-resident beneficiaries
A mutual fund trust that designates more than 5% of its
Line 13 – Adjustment for Part XIII tax capital gains distributions to non-resident beneficiaries
purposes (including any partnership that is not a Canadian
partnership) must include a portion of the distributions
Calculate the amount of Part XII.2 tax that you attribute to
when calculating Part XIII tax. Enter the amount calculated
non-resident beneficiaries. Transfer the amount from line 13
at line 42 of Schedule 10 on line 23.
to line 21 to reduce the income subject to Part XIII tax.

Line 14 – Part XII.2 refundable tax credit for Lines 25 to 27 – Non-resident tax payable
eligible beneficiaries Complete the rest of this schedule by referring to the
NR4 return for the trust.
This is the amount of Part XII.2 tax attributable to eligible
beneficiaries. It is also the amount eligible for the Part XII.2 Every non-resident person has to pay Canadian income tax
refundable tax credit for these beneficiaries. of 25% under Part XIII, unless a tax treaty or convention
provides a lower rate. Part XIII tax is paid on amounts that
If there is more than one eligible beneficiary, use the formula a Canadian trust paid or credited, or is considered to have
below to determine the amount of refundable tax credit to paid or credited, to non-residents. You have to withhold
report in box 38 of the T3 slip for each eligible beneficiary: and remit tax on these amounts. This tax has to be received
A×B÷C by the Canada Revenue Agency or a Canadian financial
institution on or before the 15th day of the month after the
where:
month during which the tax was withheld.
A = Part XII.2 tax paid by the trust (line 12)
Calculate the amount of non-resident tax payable and any
B = each eligible beneficiary’s share of the amount from
line 11 (the trust income you allocated to the eligible
balance due by following the steps in Part B of Schedule 10.
beneficiaries) Send any balance due to us, with Form NR76,
Non-Resident Tax – Statement of Account, which is a
C = adjusted allocations or designations for the year
combined remittance statement and receipt.
(line 11)
If you are remitting Part XIII tax for the first time, send us
a statement with the trust’s name and address, the type of
payment (Part XIII tax), and the month during which you
withheld the tax. When we receive the payment, we will
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issue Form NR76. You can use the bottom portion for Completing the NR4 return
remitting future payments. Guide T4061, NR4 – Non-Resident Tax Withholding,
You also have to complete an NR4 Summary, Summary of Remitting, and Reporting, explains how to report amounts
Amounts Paid or Credited to Non-Residents of Canada, the trust paid or credited to non-residents of Canada and
and an NR4 slip, Statement of Amounts Paid or Credited to how to complete and distribute the NR4 return.
Non-Residents of Canada. Report the total trust income you allocated to a
For more information on non-resident income tax, see: non-resident beneficiary as estate and trust income on the
NR4 return. Types of income, except for taxable capital
■ Information Circular IC76-12R, Applicable rate of gains from a mutual fund trust, lose their identity when
Part XIII tax on amounts paid or credited to persons in allocated to a non-resident beneficiary. Therefore, you have
countries with which Canada has a tax convention to total and report them as “Gross income” in box 16 of the
■ Information Circular IC77-16R, Non-Resident Income NR4 slip. In box 14 or 24, enter an income code of “11” for
Tax estate or trust income. Enter a code of “58” if there were
taxable Canadian property gains distributions to the
■ archived Interpretation Bulletin IT-465, Non-Resident non-resident.
Beneficiaries of Trusts
File this return no later than 90 days after the end of the
trust’s tax year.
Example
An inter vivos trust resident in Canada has two beneficiaries:
Karson, a resident of Canada who is an eligible beneficiary, Schedule 11 – Federal Income Tax
and Teagan, a non-resident who is a designated Use Schedule 11 to determine the federal income tax
beneficiary. Each beneficiary is entitled to receive an equal payable by the trust.
share of the trust income that is distributed annually.
Note
The trust has $1,400 net income for the year, which includes The trust may be subject to minimum tax. For more
net business income (from a business carried on in Canada) information, see “Schedule 12 – Minimum Tax”
of $1,000, and net interest income of $400. on page 61.
On Schedule 10, the trustee would do all of the following:
Lines 8 and 9 – Federal tax on taxable income
■ enter $1,000 on lines 1 and 6, since there are no other
Graduated Rate Estates (GRE) or Qualified Disability
sources of specified income (the $400 interest is not
specified income)
Trusts (QDT) ▲
A graduated rate estate or a qualified disability trust is
■ enter $1,400 on line 11, since this is the total amount from taxed on its taxable income for the year at the federal tax
columns 1 and 2 of line 928 of Schedule 9 rates for individuals. For more information on these types
of trusts, see the description in “Chart 1 – Types of Trusts”
■ enter the lesser of lines 6 ($1,000) and 11 ($1,400) in the
on page 9.
calculation area for line 12
Trusts other than GRE and QDT
■ multiply $1,000 by 40%, and enter the result ($400) on
line 12 Trusts other than a GRE or a QDT are taxed on their taxable
income for the year at the highest individual rate of 33%.
■ calculate the amount that is not subject to Part XIII
non-resident tax by completing the calculation area for In addition, include any tax payable by a specified
line 13 (divide $700 by $1,400 and multiply by $400). investment flow-through (SIFT) trust. For more
Enter the result ($200) on line 13 and on line 21 information on SIFT trusts and their tax calculation,
go to canada.ca/cra-sift-trust.
■ calculate the amount of refundable Part XII.2 tax credit
on line 14 by subtracting line 13 ($200) from line 12 ($400). Line 11 – Federal recovery tax ▲
Enter the result ($200) in box 38 on the T3 slip
Use this line to enter the result from the calculation
Karson received $500, but he will include $700 ($500 + $200) on Form T3QDT-WS, Recovery Tax Worksheet.
in his income for the year. This amount, which is entered in
box 26 on the T3 slip, is the 50% portion of the trust income Recovery Tax
distributed to him under the terms of the trust agreement. A trust that was a qualified disability trust in a previous tax
On his T1 return he will claim a refundable Part XII.2 tax year is subject to the new recovery tax in a year if one of the
credit of $200. following conditions is met:

Teagan received $500. This amount, which is entered on the ■ The trust ceases during the year to have among its
NR4 slip, is the 50% of the trust income distributed to her beneficiaries any individuals who in one or more earlier
under the terms of the trust agreement. On Schedule 10, tax years of the trust were electing beneficiaries of the
the trustee reduces the total income paid or payable to trust. This will include the year in which the electing
non-resident beneficiaries (line 15) by the Part XII.2 tax beneficiary of the trust (or if the trust had more than one
(line 21). Line 24 ($700 – $200 = $500) is the amount subject electing beneficiary, the last of them) dies.
to non-resident tax. ■ The year is the tax year deemed to have ended because
the trust ceased to be resident in Canada.

56 canada.ca/taxes
■ The trust distributes capital to a beneficiary other than an Line 23 – Federal foreign tax credit
individual who is an electing beneficiary for a particular This credit is available to a resident trust only for foreign
year or was an electing beneficiary of the trust in an income or profit taxes the trust paid on income it received
earlier tax year. The making by the trust of an amount from sources outside Canada. When you calculate the
payable out of the trust’s income for a year (i.e., the foreign tax credit, convert all amounts to Canadian
flowing out of its current income), or the subsequent currency. If the amount was paid at various times
satisfaction of a beneficiary’s right to enforce such an throughout the year, to get the applicable rate, go
amount, does not trigger the application of the recovery to bankofcanada.ca/rates/exchange or call 1-800-959-8281.
tax. A payment to a beneficiary in the beneficiary’s
capacity as a creditor of the trust also does not trigger the In general, the foreign tax credit you can claim for each
application of the recovery tax. foreign country is the lesser of:
■ the tax the trust paid to a foreign country

Lines 13 to 15 – Federal dividend tax credit ▲ ■ the tax payable to Canada on the portion of the income
Complete these lines if the trust reported a gross-up the trust earned in the foreign country
amount on line 24 or line 31 of Schedule 8 for dividends
Use Form T3 FFT, T3 Federal Foreign Tax Credits, to
received from a taxable Canadian corporation in the
calculate the trust’s foreign tax credit. When you complete
tax year.
Form T3 FFT, base the calculation of the credit on foreign
Calculate the dividend tax credit for eligible dividends by income amounts that have been retained by the trust and
multiplying the gross-up amount from line 24 of Schedule 8 not allocated to a beneficiary. Do not include any amounts
by 54.5455%. Calculate the dividend tax credit for relating to the designation of foreign income and foreign
dividends other than eligible dividends by multiplying the tax credits to the beneficiaries. Enter on line 23, the amount
gross-up amount from line 31 of Schedule 8 by 69.2308%. from line 12 of Form T3 FFT.
Enter the total of these amounts on line 15. The trust’s federal foreign tax credit may be less than the
Note tax paid to a foreign country. The trust can carry unclaimed
Foreign dividends do not qualify for this credit. foreign tax paid on business income back 3 years and
forward 10 years.
Line 16 – Donations and gifts tax credit ▲ The trust cannot carry forward or carry back excess
Enter the amount from line 30 of Schedule 11A. Send us amounts of any foreign non-business income tax. You may
official receipts for all claims. be able to claim some or all of the excess as one of the
following:
Line 19 – Minimum tax carryover from ■ a provincial or territorial foreign tax credit on
Form T3 PFT, T3 Provincial or Territorial Foreign Tax
previous years Credit (a trust resident in Quebec should contact Revenu
If the trust paid minimum tax in the 2015 to 2021 tax years, Québec about its entitlement to this credit)
and does not have to pay minimum tax for the 2022 tax
■ a deduction on line 19 of the return (see archived
year, you may be able to claim a credit against the
Interpretation Bulletin IT-506, Foreign Income Taxes as a
trust’s 2022 taxes payable. Use Part 7 of Schedule 12,
Deduction from Income)
Minimum Tax, to calculate the total minimum
tax carryover. Send us proof of the tax the trust paid to a foreign country.

Tax tip For more information, see Income Tax Folio S5-F2-C1,
You can carry over minimum tax from the seven Foreign Tax Credit, and archived Interpretation
previous tax years. Bulletin IT-201, Foreign Tax Credit – Trusts and
Beneficiaries.
Line 21 – Surtax on income not subject to Line 25 – Allowable federal political
provincial or territorial tax contribution tax credit
A resident trust that carries on business through a
Claim the federal political contributions tax credit for the
permanent establishment in a foreign country has to pay a
eligible amount of monetary contributions to a registered
federal surtax of 48% of its basic federal tax attributable to
party, a registered association, or a candidate, as defined in
the income earned in the foreign country.
the Canada Elections Act. Use the chart on the next page to
A non-resident trust, or a deemed resident trust, pays this calculate the credit.
tax instead of provincial or territorial tax. However, Enter the total allowable credit on line 25. If the trust’s total
business income that the trust earned in a province or eligible federal political contributions are $1,275 or more,
territory through a permanent establishment in that enter $650 on line 25. Send us an official receipt as proof of
province or territory is subject to the provincial or territorial the contribution. You do not have to send us a receipt for
tax instead of this 48% surtax. an amount shown in box 36 of a T5013 slip, or in a financial
For more information, see Form T3MJ, Provincial and statement showing an amount a partnership allocated to
Territorial Taxes – Multiple Jurisdictions. the trust. For more information, see Information
Circular IC75-2R, Contributions to a Registered Party, a
Registered Association or to a Candidate at a Federal
Election.
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 Federal Political Contribution Tax Credit
If your total federal political contributions (line 24 of your Schedule 11) were $1,275 or more, enter $650 on line 25 of your
Schedule 11.
Otherwise, complete the appropriate Line 24 is Line 24 is Line 24 is
column depending on the amount $400 or less more than $400 but more than $750
on line 24. not more than $750
Enter your total contributions.
1
– 0 00 – 400 00 – 750 00 2
Line 1 minus line 2 (cannot be negative) = = = 3
× 75% × 50% × 33.33% 4
Multiply line 3 by line 4. = = = 5
+ 0 00 + 300 00 + 475 00 6
Add lines 5 and 6
Enter this amount on line 25 of your = = =
Schedule 11.
7

Line 26 – Investment tax credit You will have to report an ITC recapture for the trust if
the trust meets the following conditions:
A trust can claim an investment tax credit (ITC) on eligible
investments and qualified expenditures that are listed on ■ acquired the property in this or any of the previous
Form T2038(IND), Investment Tax Credit (Individuals). For 11 tax years
example, a trust can claim an ITC on certain buildings,
machinery, or equipment to be used in certain areas of ■ claimed the cost, or a portion of the cost, of the property
Canada in qualified activities such as farming, fishing, as a qualified expenditure for scientific research and
logging, or manufacturing. experimental development

To claim an ITC, you have to send us the completed ■ included the cost, or a portion of the cost, of the property
Form T2038(IND) no later than 12 months after the due in calculating the trust’s ITC, or was the subject of an
date of the return for the year the expenditure occurred. agreement to transfer qualified expenditures

Send us a completed copy of Form T2038(IND) if the trust: ■ disposed of the property or converted it to commercial
use after February 23, 1998
■ earned an ITC in the tax year
Note
■ is carrying forward a credit An ITC recapture on a portion of the cost of property as
described above applies only to dispositions that occur
■ had an ITC recapture
after December 20, 2002.
■ is claiming refundable ITC in the tax year (on line 51 of
For 2016 and subsequent tax years, only a graduated rate
the T3 return)
estate and a communal organization that is treated as a
Reduce the cost of eligible investments and qualified trust can designate all or part of its deductible ITC amount
expenditures by the portion of the credit deducted or to one or more of its beneficiaries, taking into consideration
refunded. Reduce these costs in the year after the trust: the terms of the trust. For these trusts, when calculating
their ITC to be claimed in the year, do not include the
■ claims the credit
amount designated on line 941 of Schedule 9. Reduce the
■ acquired the asset if it: cost of the qualified property acquisitions or expenditures
by the amount of any ITC that you designated to the
– made the claim or refund in the year of acquisition beneficiaries in the tax year.
– applied the claim to a previous year For more information, see Form T2038(IND).
For example, the capital cost of property is reduced in 2022
by any ITC that the trust earned in 2021, and that was
claimed or refunded on the 2021 return or applied to a
previous year.

58 canada.ca/taxes
Line 32 – Additional tax on RESP GRE donations
accumulated income payments GRE donations are donations by a GRE to a qualified
donee. The donated property must be property that was
If you received an accumulated income payment from a
acquired by the estate on and as a consequence of the death
registered education savings plan (RESP) in the year, you
(or property that was substituted for such property). GRE
may have to pay an additional tax on all or part of the
donations also include designation donations.
amount in box 40 of your T4A slip. If this is the case,
complete Form T1172, Additional Tax on Accumulated You can allocate a GRE donation among any of:
Income Payments from RESPs. Enter the amount from
■ the tax year of the GRE in which the donation is made
line 10 or line 13 (whichever applies) on line 32 of
Schedule 11. For more information, see Information ■ an earlier tax year of the GRE
Sheet RC4092, Registered Education Savings Plans.
■ the last two tax years of the deceased individual (the
Line 34 – Refundable Quebec abatement ▲ final return and the return for the preceding year)

A trust may be entitled to an abatement of 16.5% of its basic In addition, a gift made after the 36 month period but
federal tax. within 60 months after the date of death by a former GRE
that continues to meet all of the requirements of a GRE
If the trust was resident in Quebec on the last day of its tax except for the 36 month time limit, can be allocated among
year and it did not have income from a business with a any of:
permanent establishment outside Quebec, complete line 34.
■ the tax year of the estate in which the donation is made
Use Form T3MJ, Provincial and Territorial Taxes – Multiple
Jurisdictions, to calculate the refundable Quebec abatement ■ an earlier tax year of the estate, if the estate is a GRE in
if one of the following situations applies to the trust: that preceding year

■ the trust was a resident in Quebec and had income from ■ the last two tax years of the deceased individual (the
a business with a permanent establishment outside final return and the return for the preceding year)
Quebec If the donation is not a one-time payment (for example, a
■ the trust resided outside Quebec and had income from donation that will continue to be made according to the
a business with a permanent establishment in Quebec terms of the will), treat the recipient as an income
beneficiary and deduct the donation as an allocation of
Enter the result on line 34 of Schedule 11. trust income on line 28 of the T3 return. You also have to
include the donation on the appropriate line of Schedule 9.
Schedule 11A – Donations and gifts
tax credit calculation Inter vivos trust
Use Schedule 11A to calculate the total donations and gifts If the recipient is an income beneficiary according to the
tax credit. terms of the trust agreement, deduct the donation on line 28
of the return, and include it on the appropriate line of
Testamentary trust Schedule 9.
Estate donations Note
Estate donations (donations made by will and designation In limited situations, a distribution by an inter vivos
donations) are deemed to be made by the individual’s trust to a registered charity may instead qualify for a
estate and where certain conditions are met, by the donations and gifts tax credit on line 16 of Schedule 11;
individual’s graduated rate estate (GRE). See GRE for example, where an alter ego trust makes a
donations on page 59. The donations are deemed to be distribution to a registered charity following the death of
made at the time the property is transferred to the donee. the settlor of the trust, and the trustee had discretion
under the terms of the trust indenture to distribute the
An estate can claim the donations and gifts tax credit in
property either to the qualified donee or to someone
respect of a donation that is not a GRE donation or former
else.
GRE donation in the year in which the donation is made or
in any of the five following years (or ten years for a gift of If the trust donates an obligation of the trust or of a related
ecologically sensitive land made after February 10, 2014). person, a share issued by a corporation related to the trust,
However, the donation cannot be allocated to a tax year of or any other security issued by a person related to the trust,
the individual or an earlier year of the estate. call 1-800-959-8281.
For deaths that occurred before 2016, gifts bequeathed in A communal organization that made charitable donations
the deceased person’s will and designation donations were can choose not to claim them and can elect to designate the
deemed to be made by the individual immediately before donations to beneficiaries. For more information, see
their death. For more information on gifts where death Information Circular IC78-5R, Communal Organizations.
occurred before 2016, see the T3 Trust Guide for the 2015
tax year. Lines 1 to 3 – Donations to registered
charities and other qualified donees
These lines include the eligible amount of all donations
made to registered charities and other qualified donees
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in 2022 plus donations and gifts made in any of the Line 12 – Amount of cultural and ecological
previous five years that have not been claimed before. For a gifts applied to the last two years of the
list of qualified donees, see Pamphlet P113, Gifts and
deceased individual (GREs and former
Income Tax.
GREs only)
Line 4 – Donations applied to the last two Use this line to indicate the amount of previously
unclaimed cultural and ecological gifts that you are
years of the deceased individual (GREs and currently applying to the last two tax years of the deceased
former GREs only) individual (the final return and the return for the preceding
Use this line to indicate the amount of previously year).
unclaimed donations that you are currently applying to the
last two tax years of the deceased individual (the final Lines 15 to 30 – Donations and gifts tax credit
return and the return for the preceding year). calculation
The donation tax credit is computed as follows:
Line 5 – Total eligible amount of charitable
donations (total of lines 1, 2, and 3 Trusts other than GREs or QDTs
minus line 4) For a trust other than a trust that is a GRE or QDT, the
This is the eligible amount of all donations made in any of donation tax credit is the total of the following:
the previous five years, which has not been claimed in any
■ The total eligible amount of gifts up to $200 multiplied
previous year and is not included on line 12. For more
by the lowest personal tax rate; and
information, see Pamphlet P113, Gifts and Income Tax, and
Income Tax Folio S7-F1-C1, Split-receipting and Deemed ■ The total eligible amount of gifts over the $200 threshold
Fair Market Value. multiplied by 33%.

Line 6 – Donations limit Trusts that are GREs or QDTs

For donations of cash or other property to a registered For a trust that is a GRE or a QDT, the donation tax credit is
charity or other qualified donee in the tax year, a trust’s the total of the following:
total donations limit will generally be 75% of its net income ■ The total eligible amount of gifts of up to $200 multiplied
for the year. by the lowest personal tax rate;

Lines 7 and 8 – Gifts of capital property ■ If the trust’s taxable income:

(including depreciable property) – is less than or equal to $221,708, multiply the total
A trust can increase its total donations limit if it donates eligible amount of gifts over the $200 threshold by
capital property in the year. For more information and how 29%;
to calculate the amount to be entered on lines 7 and 8, – is greater than $221,708, calculate the total of “A” and
see Pamphlet P113, Gifts and Income Tax, and Income Tax “B,” where:
Folio S7-F1-C1, Split-receipting and Deemed Fair Market
Value. “A” is 33% multiplied by the lesser of
■ the total eligible amount of gifts for the year that
Line 11 – Eligible amount of cultural and exceeds $200, and
ecological gifts ■ the amount, if any, by which the trust’s taxable
Unlike other donations, your total eligible amount claimed income exceeds $221,708
for these types of gifts is not limited to a percentage of net
income. You can choose the part you claim in 2022 and “B” is 29% multiplied by the total eligible amount of
carry forward any unused part for up to five years. gifts that exceeds the total of the $200 threshold and
the amount used for calculating A.
For donations of ecologically sensitive lands made after
February 10, 2014, the carry-forward period is up to Note
ten years. Ecological gifts made by any trust after February 10,
2014 and before 2016, a rate of 29% continues to apply to
A gift of ecologically sensitive lands cannot be made to a the eligible amount of the gift greater than $200.
private foundation after March 21, 2017.
For donations of certified cultural property, special rules
apply when the property was acquired through a gifting
arrangement that is a tax shelter.
For more information about these gifts and the amounts
you can claim, see Pamphlet P113, Gifts and Income Tax,
and Income Tax Folio S7-F1-C1, Split-receipting and
Deemed Fair Market Value.

60 canada.ca/taxes
Schedule 12 – Minimum Tax allocated partnership losses from gains from the same
partnership source.
If the trust is subject to a minimum tax, it may have to pay
minimum tax in the year. The following types of trusts are The trust has to pay minimum tax if it is more than the
not subject to minimum tax and do not need to complete federal tax calculated in the usual manner.
Schedule 12:
Alternative Minimum Tax
■ A spousal or common-law partner trust, a joint spousal
For 2016 and subsequent tax years, the $40,000 basic
or common-law partner trust, or an alter ego trust if it
exemption is applicable to graduated rate estate only.
reports in the year its first deemed disposition on
Form T1055, Summary of Deemed Dispositions (2002 and
later tax years). Provincial and territorial income tax ▲
■ If the trust was one of the following throughout the tax Resident trusts
year: A trust is liable for provincial or territorial tax at the rate
– a mutual fund trust that applies for the province or territory of residence if it
was a resident of a province or territory on the last day of
– a related segregated fund trust its tax year. Use the applicable provincial or territorial tax
– a master trust form to calculate the provincial or territorial tax.

– an employee life and health trust If the trust was resident in the province of Quebec on the
last day of its tax year, see the note in the section called
Minimum tax limits the tax advantage a trust can receive in “Which tax package should you use?” on page 5.
a year from certain incentives. The most common situations
that may make a trust liable to minimum tax are if it: A resident trust may carry on a business with a permanent
establishment in one of the following:
■ reports taxable capital gains (line 1 of the return)
■ a province or territory other than the province or
■ reports taxable dividends (line 3 of the return) territory of residence
■ claims a loss resulting from, or increased by, resource ■ a foreign country
expenditures, or claims resource and depletion
allowances on resource properties (line 6 or line 11 of the In these cases, you have to calculate the trust’s income from
return) each source to determine the liability for one of the
following:
■ claims a loss resulting from, or increased by, capital cost
allowance (CCA) or carrying charges claimed on a rental ■ provincial or territorial income tax
or leasing property (line 8 of the return), or certified films ■ federal surtax for income not subject to provincial or
or videotapes (line 6 of the return) territorial tax
■ has certain losses that limited partners, specified Report income from a business for each province, territory,
members of a partnership, or partners of a registered tax or foreign country in which the business had a permanent
shelter deduct for their partnership interest (for this establishment during the tax year. Send us a copy of this
purpose, losses allocated from a partnership are applied list. In general, you should allocate all other income to the
against gains from the same partnership source) province or territory of residence.
Note Use Form T3MJ, Provincial and Territorial Taxes Multiple
For tax years ending after December 31, 2011, a trust’s Jurisdictions, to report this income. To get this form, go
limited partnership loss is restricted only if the trust’s to canada.ca/cra-forms, or call 1-800-959-8281.
interest in the partnership is a registered tax shelter. This
treatment may also apply to the trust’s 2006 to 2011 tax A trust resident in a province other than Quebec, or in a
years, where the trust filed an election territory, on the last day of its tax year may have a federal
by March 11, 2014. foreign tax credit that is less than the non-business income
tax the trust paid to a foreign country. If this is the case, the
■ has losses from an investment in a registered tax shelter trust can apply the excess of foreign non-business income
■ has carrying charges for interests in limited partnerships, tax paid against provincial and territorial tax.
tax shelters, rental or leasing properties, or film or For more information, see “Line 23 – Federal foreign tax
resource properties, that increase or create a loss from credit” on page 57.
these sources
Note Non-resident trusts and deemed resident
Net income from rental, leasing, and film property trusts
includes income from these investments (before CCA A non-resident trust or a deemed resident trust that carries
and related carrying charges) plus any net taxable on a business with a permanent establishment in a province
capital gains from the disposition of these investments or territory is subject to provincial or territorial tax on the
minus any losses from these investments (before CCA business income it earned in that province or territory.
and related carrying charges). You also have to subtract

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A non-resident trust or a deemed resident trust may carry Web Forms lets you:
on a business in Canada without a permanent
■ file up to 100 slips (original, additional, amended, or
establishment in Canada. In this case, it may be subject to
cancelled) from our website
the federal surtax. For more information, see “Line 21 –
Surtax on income not subject to provincial or territorial tax” ■ calculate all of the totals for the T3 Summary
on page 57.
■ create a digital trust-related information return
Chapter 4 – T3 slip and T3 containing T3 slips and T3 Summary, which can be saved
and imported at a later date
Summary ■ print all your slips and your summary
As trustee, you have to complete a T3 slip, Statement of ■ validate data in real time
Trust Income Allocations and Designations, for each
resident beneficiary, including a preferred beneficiary, to After you submit your trust-related information return, you
whom the trust allocated income in the year. You must also will receive a confirmation number that will be your proof
do this for a trust that made any distributions of capital that that we received it.
would result in an adjustment to the adjusted cost base of To use the Web Forms application, you must have a web
the beneficiary’s interest in the trust. If you allocated access code. If you do not have a web access code, you can
income to a non-resident beneficiary, see “Column 2 – easily get one online or by calling us. For more information,
Non-resident” on page 51. see “Web access code” on page 62.
This chapter provides information on how to complete the To start using this application or to get more information
T3 slip. The T3 slip has three individual slips printed on about Web Forms, go to canada.ca/taxes-iref.
each sheet. These are intended to be used for laser or ink jet
printers, for typing, or to be completed by hand.
Filing by Internet file transfer
The T3 slip shows only the high-use boxes (boxes 12, 14, 16, Internet file transfer allows you to transmit an original or
18, 21, 23, 26, 30, 32, 39, 49, 50, and 51). There are also amended T3 return with a maximum file size of 150 MB.
six generic boxes with blank codes for less common All you need is a web browser to connect to the Internet,
amounts. If you have to use a generic box, enter the box and your software will create, print, and save your digital
number and the amount in the other information area. trust-related information return in XML format. For
If you need more than six boxes for the same beneficiary, information about this filing method, contact your software
use an additional T3 slip. publisher or go to canada.ca/taxes-iref.

You can find a sample of the slip on page 68.

Web access code
You do not have to complete a T3 slip for a beneficiary if To file your return over the Internet using the Internet file
the income allocated in the year to that beneficiary is less transfer or Web Forms service, you will need a web access
than $100. However, you have to notify the beneficiary of code (WAC). If you have misplaced or do not have a WAC,
the allocated income since it still has to be reported on the go to canada.ca/taxes-iref to access our web access code
beneficiary’s return. online service. If you cannot get your WAC online or would
You have to complete a T3 Summary, Summary of Trust like to change it, call the Business Enquiries line
Income Allocations and Designations, even if you only at 1-800-959-5525.
prepare one T3 slip. This is the form you use to record the
total of the more common amounts you reported on all Filing on paper
related slips. File only one summary for the trust, unless it If you file 1 to 50 slips, we strongly encourage you to file
is a mutual fund trust. over the Internet using Internet file transfer or Web Forms.
See the back of the T3 Summary for information on how to However, you can still file up to 50 slips on paper.
complete it. You can find a sample of the form starting on If you need more paper copies, you can order a maximum
page 68. of 9 single-page slips at canada.ca/cra-forms or
by calling 1-800-959-5525.
How to file the T3 slip and If you choose to file your return on paper, mail it to the
T3 Summary ▲ following address:
Electronic filing methods Jonquière Taxation Centre
You must file by Internet if you file more than 50 T3 Program
trust-related information returns (T3 slips) for a calendar PO Box LCD 1300
year. Jonquière QC G7S 0L5
Complete one copy of the T3 slip for each recipient and
Filing by Web Forms send them with your T3 Summary. Enter the information
Our Web Forms application is free and secure. To use it, all for two different recipients on one sheet. This will let us
you need is access to the Internet. With Web Forms you can process your information return faster. You must keep a
complete a trust-related information return easily, copy of the T3 slips and the T3 Summary for your files.
following the step-by-step instructions.

62 canada.ca/taxes
Filing using computer-printed (customized) If you prepare and issue an amended T3 slip after you have
forms filed the original slip with us, you may have to file an
amended T3 Summary. If there is a change to the amounts
For those who fill out a large number of T3 slips, we accept
in the boxes shown on the front of the summary, file an
certain slips other than our own. For help on how to fill out
amended T3 Summary. If the amended T3 slip affects the
the slips accurately, consult the guidelines for the
amounts shown on the T3 Trust Income Tax and
production of customized forms at canada.ca/cra
information Return, or on Schedule 9, Income Allocations
-customized-forms or see the current version
and Designations to Beneficiaries, do not file another T3
of Information Circular IC97-2R, Customized Forms.
return. Instead, send us a completed Form T3-ADJ, T3
If you are a mutual fund trust that files T3 slips by Internet, Adjustment Request, or a letter providing the details of the
you can combine the income and capital gains from several change. Indicate the tax year you want us to change and
funds onto one T3 slip for each unit holder. However, when send us any supporting documents. Include the trust’s
you combine the slips, you have to do all of the following: account number on the letter.
■ submit a sample of the combined information slip
requesting an approval number Amending or cancelling T3 slips over the
Internet
Notes
To amend a T3 slip over the Internet, change only
Send your digital submission in either *.pdf or *.jpg
the information that is incorrect and retain all of
format to customized-hors-series@cra.gc.ca.
the remaining information that was originally submitted.
Send your paper submission to the following address: Use summary report type code “A” and slip report type
code “A.”
Individual Returns Directorate
Information Returns Filers Services Section To cancel a slip, do not change any information that was
750 Heron Road, 7th floor contained on the original slip. Use summary report type
Ottawa ON K1A 0L5 code “A” and slip report type code “C.”
■ prepare the Internet submission of summary forms and For more information about amending or cancelling
slips, which you submit to us at the individual fund level trust-related information slips using the Internet, go
to canada.ca/taxes-iref.
■ write “Combined information slip” clearly on the T3 slip
under the recipient name and address, and provide the
unit holders with statements that allow them to reconcile Amending or cancelling T3 slips on paper
the amounts reported on the combined information slips If you choose to file your amended return on paper, clearly
identify the T3 slips as amended or cancelled by writing
■ maintain an audit trail so the combined information slips
“AMENDED” or “CANCELLED” at the top of each slip.
can be verified if we audit these funds later
Make sure you fill in all the necessary boxes, including the
information that was correct on the original slip. Send two
Distributing the T3 slip ▲ copies of the slips to the recipient. Send one copy of the
Send us the T3 slip along with the T3 Summary no later amended/cancelled slips to us with a letter explaining the
than 90 days after the end of the trust’s tax year end. See reason for the amendment/cancellation.
“Tax year-end and fiscal period” on page 18. Note
Do not staple the summary and slips to the T3 return. If you notice errors on the trust-related slips before you
file them with us, you can correct them by preparing
Send two copies of the T3 slip to the beneficiary. You do not new information slips and removing any incorrect
have to keep a copy of the T3 slips. However, when you file copies from the return. If you do not prepare a new slip,
online, you have to keep the information from which you initial any changes you make on the slip. Be sure to also
prepared the slips in an accessible and readable format. correct the T3 Summary.
You can provide recipients with a digital copy of their
T3 slips only if the recipient gives you their consent in Adding T3 slips
writing or by email. After you file your T3 return, you may discover that you
need to send us additional T3 slips. If you have original T3
If you fail to distribute the T3 slip or any other trust-related
slips that were not filed with your return, file them
information slip to a recipient by the due date, you will be
separately either online or on paper.
liable for a penalty. For more information, see “Penalties
and interest” on page 20. To file additional slips online, see “Electronic filing
methods” on page 62.
Amending, cancelling, adding, or If you file additional slips on paper, clearly identify the new
replacing T3 slips slips by writing “ADDITIONAL” at the top of each slip.
Send one copy of the additional slips to any tax centre.
After filing your T3 slips, you may notice an error on a
See “Electronic filing methods” on page 62 for more
trust-related slip. If so, you will have to prepare an
information on adding slips over the Internet or go
amended slip to correct the information. Provide copies to
to canada.ca/taxes-iref.
the recipient. Do not include slips that have no changes.

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 Notes number by the time you prepare the T3 slip, enter the
If the total number of trust-related slips (including any following in box 12:
additional slips) you file is more than 50 for the same
■ beneficiary is an individual (other than a trust)
calendar year, you have to file the additional slips over
the Internet. Enter 000000000
Any additional trust-related slips that are filed after the ■ beneficiary is a business (sole proprietor, corporation or
due date may result in a penalty. For more information, partnership)
see “Penalty for failure to file an information return by
the due date” at canada.ca/penalty-information-returns. Enter 000000000RP0000
■ beneficiary is a trust
Recipient identification number ▲ Enter T00000000
The recipient identification number is one of the following:
If you have to prepare an information slip, you, your
■ the social insurance number (SIN) if the beneficiary is an employees, your officers, or your agents cannot knowingly
individual (other than a trust) use, share, or allow a SIN, business number and program
account or trust account number to be shared without the
■ the business number and program account if the person’s or partnership’s written consent, unless required
beneficiary is a corporation or a partnership or authorized by law. Any person who does so is guilty of
■ the trust account number if the beneficiary is a trust an offence and, if convicted, may have to pay a fine or go to
jail, or both.
This section explains the special rules and penalties that
apply to using SIN, business number and program account For more information, see Information Circular IC82-2R,
and the trust account number. Social Insurance Number Legislation That Relates to the
Preparation of Information Slips.
Trustee – Anyone who prepares an information slip has to
make a reasonable effort to get the SIN, business number
and program account, or trust account number from the How to complete the T3 slip ▲
person or partnership who will receive the slip. Unless you Type or print the information on the slip. Report all
make a reasonable effort to get this information, you will be amounts in Canadian dollars. If an amount was paid in
liable to a $100 penalty each time you do not provide foreign funds at various times throughout the year, to get
the SIN, business number and program account, or trust the applicable rate, go to bankofcanada.ca/rates/exchange
account number on the information slip. This penalty does or call 1-800-959-8281.
not apply if the person or partnership has applied for but
has not yet received a SIN, a business number and program If there is a preferred beneficiary election and other income
account, or trust account number when they file their is also allocated to the same beneficiary, complete one
return. T3 slip for the elected income and a separate slip for all
other allocated income.
Beneficiary – Persons or partnerships have to give their
SIN, business number and program account, or trust You can get the information needed to complete boxes 21
account number on request to anyone who has to prepare to 51 from Schedule 9, Income Allocations and
an information slip for them. Designations to Beneficiaries.

If the person or partnership does not have a SIN, business Recipient’s name and address – Enter the information in
number and program account, or trust account number, the white area provided. If the payment is to an individual,
both of the following rules apply: enter the beneficiary’s name. If the payment is to a joint
beneficiary, enter both names. If the payment is made to a
■ the person or partnership must apply for the number trust, enter the name of the trust and not the names of the
within 15 days of your request (the SIN from any Service individual beneficiaries of that trust. If the payment is
Canada Centre, the business number and program made to an association, organization, or institution, enter
account and trust account number from CRA) that name. Following the beneficiary’s name, enter the
beneficiary’s full address including city and province or
■ once the person or partnership receives the number, they
territory. Also include the postal code.
have 15 days to give it to you
Year – Enter the applicable tax year at the top of the slip.
Persons or partnerships who, for any reason, do not comply
with these requirements are liable to a penalty of $100 for Trust year-end – Use a four-digit number to indicate the
each failure to give their SIN, business number and year, and a two-digit number to indicate the month of the
program account, or trust account number. trust’s tax year-end.
A beneficiary may have applied for but has not yet received Note
a SIN, a business number and program account, or a trust For your convenience, we have put the instructions for
account number, or the beneficiary may refuse to give you the following boxes in numeric order, even though the
the number. In these cases, do not delay filling out the order on the slip may be different. The high-use boxes
information slip beyond the filing due date. Depending on appear first, followed by the generic boxes.
the type of beneficiary, if you have not received the SIN,
business number and program account, or trust account

64 canada.ca/taxes
Box 12 – Recipient identification number ▲ organization, a charity, a non-profit
If the beneficiary is an individual (other than a trust), enter organization or other tax-exempt entity, or a
the individual’s social insurance number. deferred income plan that is exempt from tax
If the beneficiary is a business (sole proprietor, corporation Note
or partnership), enter the 15 character program account In some cases, you may have to enter information in the
number of the business. footnote area below box 26 on the T3 slip. If you need
more room to include an explanation in this area,
If the beneficiary is a trust, enter the trust account number. prepare a separate statement and attach a copy to each
Note copy of the slip.
If you do not have the number, see the section titled
“Recipient identification number” on page 64. Do not Box 21 – Capital gains
leave this box blank. Enter the result of the beneficiary’s share of the amount
from line 921 of Schedule 9, multiplied by 2.
Box 14 – Account number
Note
You have to enter the trust’s account number, if we have If box 21 includes capital gains from foreign property,
assigned one. Do not leave this box blank. For security enter an asterisk (*) beside the amount in box 21. In the
purposes, do not include the trust account number on the footnote area, identify each country, enter “non-business
copies you provide to the beneficiary. income for foreign tax credit” and the taxable portion of
1 alpha, 8 numeric: the amount included in box 21 that relates to the
disposition of foreign property.
■ T3 slip, box 14, example: T00000000
For more information, see “Line 921 – Taxable capital
■ trust account number assigned by the CRA gains” on page 51.
■ must correspond to the “Trust account number” on the
related T3 Summary record Box 23 – Actual amount of dividends other than eligible
dividends ▲
■ if you have not been assigned such a number, enter Enter the beneficiary’s share of the amount from line 923 of
T00000000 in the field Schedule 9.
Box 16 – Report code ▲ If the beneficiary is an individual or a trust (other than a
Enter one of the following codes: registered charity), see box 32 and box 39 for more
instructions.
Code Type of slip
1 alpha Box 26 – Other income ▲
Enter the beneficiary’s share of the amount from line 926 of
O Originals Schedule 9. Include amounts such as the following in this box:
A Amendments ■ death benefits
C Cancel ■ retiring allowances
Note ■ pension income other than lump-sum pension benefits
An amended return cannot contain an original T3 slip. already included in box 22
If you use code A or C, see “Amending, cancelling, adding, ■ net rental income
or replacing T3 slips” on page 63 for more information.
■ net business, farming, and fishing income
Box 18 – Beneficiary code ▲ ■ interest income
You have to enter one of the following codes to identify the Notes
type of beneficiary (do not leave this box blank): Enter an asterisk (*) beside the amount in box 26 if it
Code Type of beneficiary includes business, farming, or fishing income from a
communal organization. In the footnote area, enter
1 numeric “self-employment earnings for CPP purposes,” and
indicate the type of income—business, farming, or
1 if the beneficiary is an individual (other than a
fishing—and the amount of the beneficiary’s share.
trust)
Enter an asterisk (*) beside the amount in box 26 if it
2 if the beneficiary is a joint beneficiary
includes any net rental income from real or immovable
3 if the beneficiary is a corporation rental property transferred to the trust. In the footnote
area, enter “Net rental income” included in “earned
4 if the beneficiary is an association, a trust
income” -ITA 75(2), and indicate the amount of
(fiduciary, trustee, nominee, or estate), a club,
the beneficiary’s share.
or a partnership
No other footnotes are required for box 26.
5 if the beneficiary is a government, a
government enterprise, an international
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Box 30 – Capital gains eligible for deduction identify each foreign country and the amount of business
Only personal trusts complete box 30. income, in Canadian dollars, from each country.
Multiply the beneficiary’s share by 2, and enter the result
Box 22 – Lump-sum pension income ▲
on line 930 of Schedule 9.
Enter the beneficiary spouse’s or common-law partner’s
Note share of the amount from line 922 of Schedule 9.
Enter an asterisk (*) beside the amount in box 30. In the
footnote area, enter either “qualified farm or fishing Box 24 – Foreign business income
property,” or “qualified small business corporation Enter the beneficiary’s share of the amount from line 924
shares,” whichever applies. of Schedule 9 (before withholding taxes).
For more information, see “Line 930 – Taxable capital gains
eligible for deduction” on page 52. Box 25 – Foreign non-business income
Enter the beneficiary’s share of the amount from line 925
Box 32 – Taxable amount of dividends other than of Schedule 9 (before withholding taxes).
eligible dividends ▲
If the beneficiary is an individual or a trust (other than Box 31 – Qualifying pension income ▲
a registered charity), enter the result of the amount of Enter the beneficiary spouse’s or common-law partner’s
dividends other than eligible dividends from taxable share of the amount from line 931 of Schedule 9. This
Canadian corporations reported in box 23, multiplied amount is included in box 26.
by 1.15.
Box 33 – Foreign business income tax paid
Do not include negative amounts when completing box 32
Enter the beneficiary’s share of the amount from line 933
of the T3 slip.
of Schedule 9.
Box 39 – Dividend tax credit for dividends other than
Box 34 – Foreign non-business income tax paid
eligible dividends ▲ Enter the beneficiary’s share of the amount from line 934
If the beneficiary is an individual or a trust (other than a
of Schedule 9.
registered charity), enter 9.0301% of the amount in box 32.
Box 35 – Eligible death benefits ▲
Box 49 – Actual amount of eligible dividends ▲
Enter the beneficiary’s share of the amount from line 935
Enter the beneficiary’s share of the amount from line 949 of
of Schedule 9. This amount is included in box 26.
Schedule 9.
For more information, see “Line 935 – Eligible death
Box 50 – Taxable amount of eligible dividends ▲ benefits” on page 52.
If the beneficiary is an individual or a trust (other than a
registered charity), enter the result of the amount of eligible Box 37 – Insurance segregated fund net capital losses
dividends from taxable Canadian corporations reported in Enter the result of the beneficiary’s share of the amount
box 49, multiplied by 1.38. from line 937 of Schedule 9, multiplied by 2.

Box 51 – Dividend tax credit for eligible dividends ▲ Box 38 – Part XII.2 tax credit
If the beneficiary is an individual or a trust (other than a Enter the beneficiary’s share of the amount from line 938
registered charity), enter 15.0198% of the amount in box 50. of Schedule 9.
For more information, see “Schedule 10 – Part XII.2 Tax and
Other information area Part XIII Non-Resident Withholding Tax” on page 53.
This area on the T3 slip has boxes for you to enter codes
and amounts for less common amounts, such as foreign Boxes 40, 41 and 43 – Investment tax credit
business income, eligible death benefits, investment tax Effective for 2016 and subsequent years, only a graduated
credits, and others. rate estate or a communal organization that is deemed to be
The boxes are not pre-numbered as in the top part of the an inter vivos trust can complete boxes 40, 41 and 43.
slip. Therefore, enter the codes that apply to the beneficiary. For each type of property or expenditure made by the trust
If more than six codes apply to the same beneficiary, use in the year that is eligible for the investment tax credits
an additional T3 slip. Do not repeat all the data on the (ITC), prepare a separate T3 slip for each designation to
additional slip. Enter only the beneficiary’s identification beneficiaries.
number and name, as well as the trust’s name and account
number, and complete the required boxes in the “Other Box 40 – Investment cost or expenditures
information” area. Enter the beneficiary’s share of the amount from line 940
of Schedule 9.
Although the CRA’s position at this time is that we will not
require the breakdown by country on the T3 slip, nor Box 41 – Investment tax credit
require the filing of multiple T3 slips, it is your obligation
Enter the beneficiary’s share of the amount from line 941
and responsibility to provide us with such information on
of Schedule 9.
request. Your records have to provide enough details to

66 canada.ca/taxes
For more information, see “Lines 940 and 941 – Investment Box 45 – Other credits
tax credit (ITC)” on page 53. Research and development tax credit
Enter the beneficiary’s share of the amount from line 945
Box 42 – Amount resulting in cost base adjustment of Schedule 9.
Enter the beneficiary’s share of the amount from line 942
Note
of Schedule 9. If this is a negative amount, put it in
Enter an asterisk (*) beside the amount in box 45. In the
brackets.
footnote area, enter “Newfoundland and Labrador
Note R&D” or “Yukon R&D,” whichever applies, and the
Enter an asterisk (*) beside any amount entered in amount of this credit from box 45.
box 42. In the footnote area, indicate whether the amount
should be added to the adjusted cost base (ACB) of the Box 46 – Pension income qualifying for an eligible
property (for a negative amount), or subtracted from annuity for a minor ▲
the ACB (for a positive amount). Enter the beneficiary’s share of the pension income that is
eligible for a transfer to an eligible annuity for certain
Do not include new units issued to a beneficiary in
minors, from line 946 of Schedule 9 (also included in
satisfaction of a distribution of income. Instead, advise the
box 26).
beneficiary that you have issued these units, as well as the
number of units and their value.
Box 47 – Retiring allowance qualifying for transfer to an
RPP or RRSP
Box 43 – Investment tax credit – Code number
Enter the beneficiary’s share of the retiring allowance,
Enter the applicable investment tax credit code number (4B,
which qualifies for a transfer to a registered pension plan or
12, 6 or 7) and provide a statement to each beneficiary with
registered retirement savings plan, from line 947 of
the following description, as applicable, of the code
Schedule 9 (also included in box 26).
number:
■ Code 4B – Qualified expenditures for scientific research Box 48 – Eligible amount of charitable donations
and experimental development (SR&ED): Enter the beneficiary’s share of the charitable donations or
– Enter the Box 40 amount on line 67120 of gifts of a communal organization, from line 948 of
Form T2038(IND), Investment Tax Credit Schedule 9. For more information, see Information
(Individuals). Circular IC78-5R, Communal Organizations.

■ Code 12 – Qualified property, or qualified resource

property acquired after 2013 and before 2017 that is
eligible for the transitional relief rate:
– Enter the Box 40 amount on line 67140 of
Form T2038(IND).
For more information, go to canada.ca/atlantic-investment
-tax-credit.
■ Code 12 – Qualified resource property acquired in 2015
that is not eligible for the transitional relief rate:
– Enter the Box 40 amount on line 6723 of the 2015
version of Form T2038(IND) and file it with your
2016 return.
■ Code 6 – Apprenticeship job creation tax credit:
– Enter the Box 40 amount on the appropriate line of
Part B of Form T2038(IND).

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Appendix A – T3 slip and T3 Summary ▲

68 canada.ca/taxes
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70 canada.ca/taxes
Digital services
My Account & MyCRA Submitting and filing documents
Digital services for individuals online related to T3
The CRA’s digital services are fast, easy, and secure!
Trust administrators and tax preparers can submit
documents online related to the T3 Return for residents and
My Account non residents. Sending documents through the “Submit
My Account lets you view and manage your personal documents online” service is secure, reliable, easy, and
income tax and benefit information online. Find out how to more efficient.
register at canada.ca/my-cra-account.
Documents you can submit online
MyCRA mobile web app The following documents can be submitted online for
The MyCRA mobile web app lets you access key portions estates and trusts:
of your tax information. Access the app at canada.ca/cra
■ Form T3APP, T3 Application for Trust Account Number
-mobile-apps.
■ Form T3-ADJ, T3 Adjustment Request
Use My Account or MyCRA to:
■ All supporting documents the CRA asks for to complete
■ view your benefit and credit information
the T3 tax assessment or reassessment
■ view your notice of assessment
■ change your address, direct deposit information, marital How to submit your document(s) online
status and information about children in your care You can submit documents online related to the T3 Return
through two of the CRA’s secure portals:
■ manage modification preferences and receive email
notifications when important changes are made to your ■ My Account
account
■ Represent a Client
■ check your TFSA contribution room and RRSP deduction
To access the “Submit documents” services online , trust
limit
administrators must log into My Account using their social
■ check the status of your tax return insurance number. Tax preparers and authorized
representatives of trust administrators can also access the
■ make a payment to the CRA online with My Payment or “Submit documents” services online by logging into
a pre-authorized debit (PAD) agreement, or create a QR Represent a Client.
code to pay in person at Canada Post
Once in My Account, select “Submit documents” from the
■ view uncashed cheques and request a duplicate payment menu bar. Enter your reference or case number and click
You can also use My Account to: “next.” If you do not have a reference or case number click
on the link “You may be able to submit documents without
■ view and print your proof of income statement a case or reference number.”
■ submit documents to the CRA Once in Represent a Client, select “Submit documents”
■ authorize a representative from the menu bar. Select the client type or the program
area you want to submit your electronic document to. If
■ submit an audit enquiry you have a reference or case number click “yes” and enter it
■ link between your CRA My Account and Employment on the next page. If you do not have a reference number
and Social Development Canada (ESDC) My Service click “no.”
Canada Account
After you submit your document(s)
Receiving your CRA mail online After submitting documents, a confirmation page will
You will receive email notifications when your CRA mail, display a confirmation number, as well as a case or
like your notice of assessment, is available in your account. reference number for future communication regarding the
You can manage your notification preferences in My documents.
Account or MyCRA. Please note that the Canada Revenue Agency scan all
For more information, go to canada.ca/cra-email documents submitted online for malware and viruses
-notifications. according to our and Shared Services Canada policies and
standards.
If your documents are valid and contain no virus or
malware, they will be sent to the appropriate area in charge
of assessing T3 returns.

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Supporting documents ■ T3RI, Registered Investment Income Tax Return
You must send the following documents if they apply to ■ T3GR, Group Income Tax and Information Return for
the T3 return you filed online: RRSP, RRIF, RESP, or RDSP Trusts
■ elections ■ T1061, Canadian Amateur Athletic Trust Group
■ designations Information Return

■ agreements ■ T3PRP, T3 Pooled Registered Pension Plan Tax Return

■ waivers ■ T2000, Calculation of Tax on Agreements to Acquire

Shares (Section 207.1(5) of the Income Tax Act)
■ special elective returns (including any supporting
documents) For more information, go to canada.ca/cra-submit
-documents-online.
■ Form T1135, Foreign Income Verification Statement
Filing by Internet file transfer
With the exception of Form T1135, you must send these
Web access code
documents to the tax centre serving the area the trustee
resides in. You can send Form T1135 to the tax centre To file your return over the Internet using the Internet file
shown on that form. For more information, go transfer, you will need a web access code (WAC).
to canada.ca/how-file-t3-return. If you have misplaced or do not have a WAC, go to
canada.ca/taxes-iref to access our web access code online
Keep all supporting documents (for example, books, service. If you cannot get your WAC online or would like to
records, forms, schedules, and receipts) you used to change it, call the Business Enquiries line at 1-800-959-5525.
prepare a return for six years from the end of the tax year
they relate to. Eligibility
Internet file transfer is available to most taxpayers and tax
Reference or case numbers preparation service providers when the trust’s taxable
You can submit documents electronically without a income, tax payable and refundable credits are $0.00.
reference or case number. The “Submit documents” service However some exceptions apply. For a list of exceptions,
will ask you, from a picklist, to choose the reason you are see “Restrictions” and “Other Restrictions” below.
sending them.
Restrictions
If you want to send other documents related to the original There are certain types of returns that can’t be sent to the
submission, you will need to use the reference or case CRA electronically:
number you received after your initial submission.
■ an amended tax return
Documents you can file through EFILE ■ a return for any taxation year before 2017
■ T3RET, T3 Trust Income Tax and Information Return
You can’t use Internet file transfer to file your return if you
■ T3ATH-IND, Amateur Athlete Trust Income Tax Return meet one of the following conditions:
■ T3M, Environmental Trust Income Tax Return ■ you are filing a return for the first time with the CRA and
the CRA has not assigned you a trust account number
■ T3S, Supplementary Unemployment Benefit Plan Income
Tax Return ■ the trust is reporting taxable income, tax owing, or
refundable credits
Documents you can file online ■ the trust went bankrupt in the year (does not include a
You can use the Canada Revenue Agency's secure Internet proposal for bankruptcy)
File Transfer service to send the following forms in XML
You can’t use Internet file transfer to change trust
format:
information, such as, the trust’s:
■ T3SUM, Summary of Trust Income Allocations and
■ name
Designations
■ legal representative (administrator/executor/liquidator/
■ T3, Statement of Trust Income Allocations and
or trustee)
Designations
■ legal representative’s address
■ T3D, Income Tax Return for Deferred Profit Sharing Plan
(DPSP) or Revoked DPSP ■ alternate mailing address, if different from the legal
representative’s address
■ T3P, Employees’ Pension Plan Income Tax Return
■ direct deposit information (nor can you request direct
deposit)

72 canada.ca/taxes
Other restrictions – capital gains on gifts of certain capital property on
The following is a list of specific situations that prevent you Schedule T3SCH1A, Capital Gains on Gifts of Certain
from filing a return through the Internet file transfer Capital Property
service: – designations of taxable capital gains eligible for
■ the trust is a specified investment flow-through (SIFT) deduction on line 930 of T3SCH9, Income Allocations
trust (Type of trust code 338) and Designations to Beneficiaries

■ for the related tax year, the trust is subject to deemed ■ the trust is subject to minimum tax and has a net
dispositions as detailed on Form T1055, Summary of adjusted taxable income for minimum tax (line 28 of
Deemed Dispositions (2002 and later tax years) Schedule T3SCH12, Minimum Tax) that is greater
than $0.00
■ the trust is reporting one of the following:
■ the trust is filing Form RC199, Voluntary Disclosures
– gross-up amounts of dividends on line 49 of the return Program (VDP) Application, or the taxpayer is making a
– reserves on Schedule T3SCH2, Reserves on request under the Voluntary Disclosures Program
Dispositions of Capital Property, or on line 14 of
Schedule T3SCH1, Dispositions of Capital Property

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For more information
Taxpayer Bill of Rights Getting information by telephone
The Taxpayer Bill of Rights (TBR) describes and defines If you or your representative calls us, we will ask:
16 rights and builds upon the CRA’s corporate values of
■ for your name and address, and the date you were
integrity, professionalism, respect, and collaboration. It
appointed as trustee
describes the treatment you are entitled to when you deal
with the CRA. The TBR also sets out the CRA Commitment ■ whether a copy of the will, trust agreement, or letters of
to Small Business to ensure their interactions with the CRA administration has been filed with us. If not filed, we will
are conducted as efficiently and effectively as possible. ask for a copy or for some other form of proof that will
allow us to give you the information you need. If you
For more information about your rights and what you can
have questions about the assessment of the trust’s return,
expect when you deal with the CRA, go to canada.ca
we may also ask you for information about the return
/taxpayer-rights.
■ for the date that your company was appointed as trustee,
If you need help if you are an employee of a corporate trustee
If you need more information after reading this publication,
go to canada.ca/taxes or call 1-800-959-8281. Teletypewriter (TTY) users
If you have a hearing or speech impairment and use a TTY,
Once a trust return is filed, the information on it becomes
call 1-800-665-0354.
confidential. For this reason, we follow certain procedures
before giving out information about the trust. Information If you use an operator-assisted relay service, call the CRA’s
can be given only to the trustee (or other legal regular telephone numbers instead of the TTY number.
representative, such as an executor, administrator, assignee,
receiver, or liquidator) or an authorized representative. The
authorized representative could be an accountant, lawyer,
Giving or cancelling an authorization
or tax preparer acting for the trustee. For information about For more information about authorizing a representative or
authorizing a representative, go to canada.ca/taxes cancelling an authorization already given, go to
-authorize-representative. canada.ca/taxes-authorize-representative.
Although beneficiaries are entitled to information related to The authorization, or cancellation of an authorization,
their personal tax situation, they are not entitled to should include all of the following:
information from us about the tax affairs of the trust.
■ the name and account number of the trust

Part XIII ■ your representative’s name (individual or firm) and

telephone number
If you need more information after reading this publication,
go to canada.ca/taxes or call one of the following numbers: ■ your signature as the authorized signing person (trustee,
executor, administrator, or liquidator), telephone
■ 1-855-284-5946, from Canada and the United States
number, and the date
■ 1-613-940-8499, from outside Canada and the United
If any of the legal representatives are deceased or no longer
States. The CRA only accepts collect calls made through
wish to act as a legal representative, make sure to include
telephone operators. After your call is accepted by an
the death certificate or a letter of renunciation from each
automated response, you may hear a beep and notice a
legal representative.
normal connection delay.
You have to complete a separate written authorization or
Direct deposit consent form for each representative appointed or
cancelled. Note that authorizing a new representative will
Direct deposit is a fast, convenient, and secure way to get not cancel your existing authorizations unless you ask us to
your CRA payments directly into your account at a cancel existing authorizations.
financial institution in Canada. For more information and
ways to enrol, go to canada.ca/cra-direct-deposit or contact
your financial institution.

Forms and publications

The CRA encourages filing your return electronically.
If you need a paper version of the CRA’s forms and
publications, go to canada.ca/cra-forms-publications or
call 1-800-959-8281.

74 canada.ca/taxes
Complaints and disputes Formal disputes (objections and appeals)
Service complaints If you disagree with an assessment, determination, or
decision, you have the right to file a formal dispute.
You can expect to be treated fairly under clear and
established rules, and get a high level of service each time For more information about objections or formal disputes,
you deal with the CRA. For more information about the and related deadlines, go to canada.ca/cra-complaints
Taxpayer Bill of Rights, go to canada.ca/taxpayer-rights. -disputes.
If you are not satisfied with the service you received:
Reprisal complaints
1. Try to resolve the matter with the employee you If you have previously submitted a service complaint or
have been dealing with or call the telephone requested a formal review of a CRA decision and feel you
number provided in the correspondence you were not treated impartially by a CRA employee, you can
received from the CRA. If you do not have submit a reprisal complaint by filling out Form RC459,
contact information for the CRA, go to Reprisal Complaint.
canada.ca/cra-contact.
2. If you have not been able to resolve your For more information about complaints and disputes, go to
service-related issue, you can ask to discuss the canada.ca/cra-complaints-disputes.
matter with the employee's supervisor.
3. If the problem is still not resolved, you can file a
service-related complaint by filling out Form
RC193, Service Feedback. For more information
and to learn how to file a complaint, go to
canada.ca/cra-service-feedback.
If you are not satisfied with how the CRA has handled your
service-related complaint, you can submit a complaint to
the Office of the Taxpayers’ Ombudsperson.

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Index
Topic Income Tax Act reference Page
Actual amount of dividends from taxable Canadian
corporations .............................................................................. 82(1), 260(5)................................................................................. 25, 43
Adjusted cost base ....................................................................... 53, 54 ............................................................................................ 37, 40
Allocations and designations ..................................................... 104(6), (13), (19), (20), (21), (22), (22.1), (27), (27.1), (29) .............. 45
Allowable business investment losses (ABIL) ......................... 38(c), 39(1)(c), 39(10), 50(1) ............................................................. 28
Allowable federal political contribution tax credit ................. 127(3) ................................................................................................. 57
Alter ego trust .............................................................................. 104(4)(a), 248(1) .................................................................................. 9
Amount resulting in cost base adjustment ............................... 53(1), (2)....................................................................................... 53, 67
Amending, cancelling, adding, or replacing trust-related
information slips ................................................................................................................................................................................... 63
Arm’s length transaction ............................................................ 251(1) ................................................................................................... 5
Bonds ......................................................................................................................................................................................................... 38
British Columbia mining exploration tax credit ................................................................................................................................... 32
Canadian cultural property ....................................................... 39(1)(a)(i.1), 118.1(10) ...................................................................... 36
Capital dispositions .................................................................................................................................................................................. 35
Capital gains ................................................................................. 3, 38, 38.1, 39, 40, 138.1(3).................................................... 40, 51, 65
Capital gains deduction .............................................................. 110.6(12) ................................................................................ 32, 52, 66
Capital gains refund .................................................................... 132 ...................................................................................................... 32
Carrying charges and interest expenses ................................... 20(1)(c), (bb), 20(2.1) .................................................................. 28, 44
Clearance certificate .................................................................... 159(2), (3)........................................................................................... 22
Communal organization ............................................................. 143 ........................................................................................................ 9
Completing the NR4 return..................................................................................................................................................................... 56
Crown royalties......................................................................................................................................................................................... 27
Death benefits.............................................................................. 104(28), 248(1) ....................................................................... 27, 52, 66
Deemed disposition..................................................................... 104(4), (5), (5.1), (5.2) ................................................................. 27, 41
Deemed resident trust ................................................................. 94(1), 94(3)......................................................................................... 10
Definitions
Administrator .......................................................................................................................................................................................... 5
Allocate, allocation ................................................................................................................................................................................. 5
Arm’s length transaction........................................................................................................................................................................ 5
Beneficiary ............................................................................................................................................................................................... 6
Common-law partner ............................................................................................................................................................................. 6
Contribution of property ....................................................................................................................................................................... 6
Deemed disposition ................................................................................................................................................................................ 6
Designate, designation ........................................................................................................................................................................... 6
Distribute, distribution ........................................................................................................................................................................... 6
Executor.................................................................................................................................................................................................... 6
Exempt property ..................................................................................................................................................................................... 6
Gift ............................................................................................................................................................................................................ 6
Liquidator ................................................................................................................................................................................................ 6
Preferred beneficiary .............................................................................................................................................................................. 7
Principal residence .................................................................................................................................................................................. 7
Settlor........................................................................................................................................................................................................ 7
Spouse ...................................................................................................................................................................................................... 7
Testator ..................................................................................................................................................................................................... 7
Trust .......................................................................................................................................................................................................... 7
Trustee ...................................................................................................................................................................................................... 7
Vested interest ......................................................................................................................................................................................... 7
Will............................................................................................................................................................................................................ 7
Designated beneficiary ............................................................... 210 ...................................................................................................... 54
Distributing the T3 slip ............................................................................................................................................................................ 63
Distribution of property to beneficiaries .................................. 104(5.3), 107(2), (2.1), (2.2), (4) ........................................................ 34
Dividend income ......................................................................... 82(1), 104(19) ............................................................................... 43, 52
Dividends, gross-up .................................................................... 82(1)(b) .............................................................................................. 45
Dividends, non-taxable received by a trust.............................. 53(2), 83(1), (2), 104(20).................................................................... 44
Donations and gifts ..................................................................... 104(6), 118.1, 143(3.1) ..................................................... 33, 53, 57, 67

76 canada.ca/taxes
Topic Income Tax Act reference Page
Election – 164(6)........................................................................................................................................................................................ 35
Election – 164(6.1) ..................................................................................................................................................................................... 35
Election to defer payment of tax (Form T2223) ....................... 159(6.1), (7)........................................................................................ 43
Elections (late or amended) ........................................................ 220(3.2), Reg. 600.............................................................................. 22
Eligible beneficiary ................................................................................................................................................................................... 54
Employee benefit plan ................................................................ 6(1)(g), 6(10), 12(1)(n.1), 18(1)(o), 32.1, 104(6), 248(1) .................. 10
Employee life and health trust ................................................... 144.1(2) ............................................................................................. 10
Employee trust ............................................................................. 6(1)(h), 104(6), 248(1) ....................................................................... 11
Exemption from Form T1055 deemed dispositions ................ 108(1) ................................................................................................. 42
Farming and fishing losses ........................................................ 31, 111(1)(c), (d), 111(8) ................................................................... 31
Farming income ........................................................................................................................................................................................ 26
Federal dividend tax credit ........................................................ 121 ...................................................................................................... 57
Federal foreign tax credit ............................................................ 20(11), (12), 126 ................................................................................. 57
Federal income tax.................................................................................................................................................................................... 56
Federal political contribution tax credit ................................... 127(3) ................................................................................................. 57
Final return ................................................................................................................................................................................................ 19
Fishing income .......................................................................................................................................................................................... 26
Foreign investment income ............................................................................................................................................................... 25, 44
Foreign non-business income tax paid ..................................... 104(22.1), 126(1)(a) ..................................................................... 52, 66
Foreign property – Reporting requirements ......................................................................................................................................... 24
Graduated rate estate ................................................................. 248(1) ................................................................................................... 9
Gross-up amount of dividends .................................................. 82(1)(b) .............................................................................................. 45
How to file the T3 slip and summary.................................................................................................................................................... 62
How to register a formal dispute............................................... 165(1) ................................................................................................. 22
Identification and other required information ..................................................................................................................................... 23
Income paid or payable to non-resident beneficiaries ............ 104(13), 212(1)(c) .............................................................................. 51
Income paid or payable to resident beneficiaries ................................................................................................................................. 50
Income to be taxed in the trust................................................................................................................................................................ 48
Insurance segregated fund trust ................................................ 138.1 ................................................................................................... 11
Inter vivos trust ............................................................................ 108(1), 122 ......................................................................... 8, 16, 18, 59
Interest........................................................................................... 161, 164(3), 248(11), Reg. 4300, 4301, 4302 .................................... 21
International financial reporting standards .......................................................................................................................................... 25
Investment income ............................................................................................................................................................................. 25, 43
Investment tax credit (ITC) ........................................................ 13(7.1), 37(1), 127(5), (12.3)........................................................ 53, 58
Investment tax credit – designated ........................................... 127(7) ........................................................................................... 53, 66
Joint spousal or common-law partner trust............................. 104(4)(a), 248(1) ................................................................................ 12
Listed personal property ............................................................ 41, 54 ............................................................................................ 31, 40
Loss carryback, request ............................................................................................................................................................................ 31
Loss restriction event .................................................................. 251.2(2) .............................................................................................. 30
Lump-sum pension income........................................................ 60(j), 104(27), (27.1) .......................................................................... 51
Master trust .................................................................................. 149(1)(o.4), Reg. 4802(1.1) ............................................................... 12
Minimum tax ................................................................................ 120.2, 127.5 to 127.55 .................................................................. 57, 61
Mutual fund trust ........................................................................ 132(6), (6.1), (7), Reg. 4801, 4803..................................................... 12
Mutual fund units and other shares.......................................... 248(1) ................................................................................................. 38
My Account .................................................................................. ............................................................................................................ 71
Net capital losses of other years ................................................ 3, 38, 39, 104(21), 111(1)(b), 111(8).................................................. 31
Newfoundland and Labrador research and
development tax credit............................................................................................................................................................. 32, 53, 67
Non-capital losses of other years ............................................... 111(1)(a), 111(8) ................................................................................ 30
Non-profit organization.............................................................. 149(1)(l), 149(5), (12) ........................................................................ 13
Non-resident beneficiary ................................................................................................................................................................... 51, 56
Non-resident tax payable ........................................................... 212(1)(c) ............................................................................................. 55
Non-resident trusts............................................................................................................................................................................... 5, 61
Non-resident withholding tax – Part XIII ................................. 212 ...................................................................................................... 55

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Other credits ............................................................................................................................................................................................. 32
Other income ................................................................................................................................................................................. 27, 52, 65
Other investment income .................................................................................................................................................................. 25, 44
Other required information ..................................................................................................................................................................... 24
Outlays and expenses.................................................................. 40(1) ................................................................................................... 37
Part XII.2 tax ................................................................................ 210 to 210.3 ....................................................................................... 53
Part XII.2 tax credit ...................................................................... 210.2(3), (4)............................................................................ 32, 53, 66
Part XIII tax................................................................................... 212 to 217 .......................................................................................... 55
Penalties ........................................................................................ 162(1), (2), (7), (7.01), 163(1), 163.2(4), 238(1) ................................ 20
Pension income (benefits) ........................................................... 56(1)(a)(i), 147(10) ................................................................ 25, 52, 66
Personal trust ............................................................................... 248(1) ................................................................................................... 9
Personal-use property ................................................................. 40(2)(g)(iii), 46, 54 ............................................................................ 39
Political contribution tax credit (federal) .................................. 127(3) ................................................................................................. 57
Preferred beneficiary election .................................................... 104(12), (14), (14.01), (14.02), (15), 108(1), Reg. 2800 .............. 49, 51
Principal residence ...................................................................... 40(2)(c), (4), 54, 107(2.01) ............................................................. 7, 39
Proceeds of disposition ............................................................... 54, 107(2), (4) ..................................................................................... 36
Property acquired before 1972 ................................................... 40(1), ITAR 24, 26(3), 26(7).............................................................. 37
Qualified disability trust (QDT)................................................ 122(2) ................................................................................................. 13
Qualified farm or fishing property ............................................ 110.6(1), (14), 248(1) ......................................................................... 38
Qualified small business corporation shares ........................... 110.6(1), (14), 248(1) ......................................................................... 38
Qualifying environmental trust ................................................. 211.6(1) .............................................................................................. 14
Qualifying pension income ........................................................ 104(27), 118(7) ............................................................................. 52, 67
Real estate and depreciable property ....................................... 13(21), ITAR 20(1) ............................................................................ 38
Reassessments .............................................................................. 152(3.1), (4), (4.1), (4.2), 244(14), (15) ............................................. 21
Recipient identification number ................................................ 162(5), (6), 237, 239(2.3) ............................................................. 64, 64
Refundable Part XII.2 tax credit .................................................................................................................................................. 32, 54, 66
Refundable Quebec abatement .................................................. 120(2) ................................................................................................. 59
Registered disability savings plan (RDSP) trust ................................................................................................................................... 12
Registered retirement savings plans (RRSP) ............................................................................................................................. 28, 45, 67
Rental income ............................................................................................................................................................................................ 26
Reserves on dispositions of capital property ........................... 40(1)(a)(iii) ........................................................................................ 40
Residence of trust ............................................................................................................................................................................... 20, 61
Retirement compensation arrangement (RCA) ....................... 248(1) ................................................................................................. 14
Royalties........................................................................................ 12(1)(o) .............................................................................................. 27
RRSP, RRIF, or RESP trusts ..................................................................................................................................................................... 14
Salary deferral arrangement ...................................................... 6(1)(a), (i), 6(11), (12), 248(1) ........................................................... 15
Schedule 1 – Dispositions of Capital Property ..................................................................................................................................... 33
Schedule 8 – Investment Income, Carrying Charges, and
Gross-up Amount of Dividends Retained by the Trust................................................................................................................... 43
Schedule 9 – Income Allocations and
Designations to Beneficiaries.................................................. 104(13), (14), 108(1), 212(1)(c), Reg. 2800....................................... 45
Schedule 10 – Part XII.2 Tax and
Part XIII Non-Resident Withholding Tax .......................................................................................................................................... 53
Schedule 11 – Federal Income Tax ......................................................................................................................................................... 56
Schedule 12 – Minimum Tax ................................................................................................................................................................... 61
Security options deduction......................................................... 164(6.1) .............................................................................................. 35
Service complaints ....................................................................... ............................................................................................................ 75
Specified income .......................................................................... 210.2(2) .............................................................................................. 54
Specified investment flow-through (SIFT) trust ................................................................................................................................... 15
Specified trust............................................................................... 108(1) ................................................................................................... 9
Split income .................................................................................. 120.4 ................................................................................................... 46
Spousal or common-law partner trust ...................................... 104(4)(a), 108(1) .................................................................................. 9
Summary of deemed dispositions (Form T1055)..................... 104(4), (5), (5.1), (5.2) ....................................................................... 41
Surtax on income not subject to provincial
or territorial tax ........................................................................ 120(1) ................................................................................................. 57
T3 slip (completing and distributing) ................................................................................................................................................... 64
Tax paid by instalments ........................................................................................................................................................................... 32

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Taxable capital gains ................................................................... 3, 38, 39, 40(1), 104(21), (21.3) ................................................... 25, 51
Taxable capital gains eligible for deduction............................. 104(21), (21.1), (21.2), 110.6 ....................................................... 52, 66
Tax-free savings account (TFSA) trust ...................................... 146.2(5), 248(1) .................................................................................. 15
Taxpayer Bill of Rights ............................................................................................................................................................................. 74
Tax year ......................................................................................... 104(23), 248, 249(1)(b) ...................................................................... 18
Testamentary trust....................................................................... 73, 108(1), 248(8), (9.1) ........................................................... 7, 16, 59
Total capital losses transferred under 164(6) ........................................................................................................................................ 40
Total income allocations and designations to beneficiaries .................................................................................................... 30, 45, 51
Transfer and loans of property .................................................. 56(4.1) to (4.3), 74.1(1), (2), 74.2, 74.3, 74.5, .......................................
248(25), 251, 252 ............................................................................... 46
Transfer of trust property to another trust ............................... 104(5.8) .............................................................................................. 43
Trustee fees ................................................................................... 9(1), 20(1)(bb).................................................................................... 28
Types of trusts ............................................................................................................................................................................................. 7
Unit trust ...................................................................................... 108(2) ................................................................................................. 15
Upkeep, maintenance, taxes – Beneficiary ............................... 105(2) ................................................................................................. 29
Value of other benefits to a beneficiary ................................... 105(1) ................................................................................................. 29
Yukon research and development tax credit ............................................................................................................................ 32, 53, 67

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