Each year, affected trusts must report additional information on all trustees, beneficiaries, settlors, and each person who has the ability to exert control or override trustee decisions over the appointment of income or capital of the trust (e.g., a protector), including:
- Date of birth
- Jurisdiction of residence
- Taxpayer identification number, such as social insurance number, trust account number, business number or taxpayer identification number used in a foreign jurisdiction
For purposes of this reporting, a settlor refers to a person who has made a loan or transfer of property, to or for the benefit of the trust at anytime. A loan or transfer made for the benefit of the trust would include, for example, the transfer of property to establish the trust (the traditional meaning of settlor), a low-interest loan, or a transfer at less than fair market value to an entity in which the trust has an interest. (Commercial loans and transfers for value by an arm's length persons would not create a settlor relationship.)
This enhanced reporting obligation aims to help the government more effectively counter aggressive tax avoidance, tax evasion, money laundering, and other criminal activities perpetrated through the misuse of trusts. With this in mind, trustees should know that reporting this new information may prove onerous for certain trusts and should plan ahead to be in compliance.
This information should be reported on a new schedule to be filed with the trust's T3 return. Note that affected trusts must file the T3, including the new schedule, and cannot simply file the new schedule on its own even if the trust has no income for the year. In the case of family trusts, this means that they will need to be transparent with respect to all possible beneficiaries—even contingent beneficiaries—of the trust as well as making annual trust filings in years where there is no distribution of income or capital.