Loading Website ...
Loading Website ...
Further to our correspondence of January 23, 2024, the Canada Revenue Agency (“CRA”) has published further clarification as of Wednesday, March 12, 2024 on penalty relief for Bare Trust tax return filings, which have a March 31, 2024 filing deadline.
This clarification states that no late filing penalties should be applied if the filing is made after the due date, except “in the most egregious cases”. This relief is only available for the 2023 year.
This update to the CRA website is as follows:
3.5. Will the CRA provide any relief for penalties if a bare trust does not file their 2023 T3 Return and Schedule 15 by the filing deadline as required? Updated
As some bare trusts may be uncertain about the new requirements, the CRA is adopting an education-first approach to compliance and providing relief to bare trusts by waiving the penalty payable under subsection 162(7) of the Income Tax Act for the 2023 tax year in situations where the T3 Return and Schedule 15 are filed after the filing deadline for reasons other than gross negligence. For the 2023 tax year, where the tax year of the trust ends on December 31, 2023, the filing deadline of March 30, 2024, is extended to April 2, 2024, the first business day after the deadline.
This proactive relief is for bare trusts only and only for the 2023 tax year.
While the Act also includes a gross negligence penalty under subsection 163(5), as part of the CRA’s education-first approach, the CRA will only apply this penalty in the most egregious cases where a bare trust fails to file. Imposing such penalty would only occur in the context of a compliance action, such as an audit, where all factors and circumstances of the taxpayer’s particular situation are considered together. A gross negligence penalty for failing to file will be subject to oversight and approval by Headquarters, following a mandatory referral.
Under the Act, the gross negligence penalty is equal to the greater of $2,500 and 5% of the highest amount at any time in the year of the fair market value of all the property held by the trust.
If you are concerned that you have a bare trust situation, you may choose to do the following:
If you have any questions regarding this penalty relief, please feel free to reach out to us for assistance.
The information contained in this article is for general use only and should not be viewed as professional advice. Accounting and tax rules and regulations regularly change and individuals should contact a competent professional to obtain accounting and tax advice based on their specific situation.
Our dynamic Team are always contributing the latest tips and techniques to keep you in the know with all things tax, accounting, and bookkeeping. See more from this author below.
