By Terrance S. Carter, Theresa L.M. Man and Jacqueline M. Demczur

As reported in our Charity & NFP Law Bulletin No. 523, the Canada Revenue Agency (“CRA”) has clarified reporting requirements for internal express trusts held by registered charities. On November 10, 2023, the CRA made an announcement that it will not require registered charities to file T3, Trust Income Tax and Information Return, for internal trusts held by registered charities (i.e., trusts that are created when a charity “receives property as a gift that is subject to certain legally enforceable terms and conditions; and holds that property as the trustee of the trust”).

However, the CRA announcement does not explain that there are still some situations by which charities and non-profit organizations (“NPOs”) may need to file T3 trust returns. For more information about what is involved in filing T3 reporting requirements for charities and NPOs, reference can be made to our Charity & NFP Law Bulletin No. 522 dated June 29, 2023 that was posted prior to the recent announcement by the CRA.

From a review of the applicable provisions of the Income Tax Act, it is apparent that T3 trust reporting will still be required by charities and NPOs in certain situations other than those involving internal express trusts held by charities, including:

1. internal express trusts held by NPOs;
2. express trusts held by charities for beneficiaries other than the charity itself; and
3. bare trusts, including bare trusts held by third parties for the benefit of a charity or an NPO.

In this regard, it would be helpful for the CRA to provide details about the extent of the administrative exemption that has been announced by explaining the circumstances by which charities and NPOs may still be required to file T3 trust returns. In the meantime, charities and NPOs may wish to consult with their own legal and accounting advisors in order to review their particular fact situations to see if there might be specific circumstances by which the organization may still be required to file T3 trust returns by March 30, 2024.

​Read the November 2023 Charity & NFP Law Update