If your accounting firm handles tax preparation for a trust, you can file the T3 (Trust Income Tax and Information Return) electronically as of January 2018. Filing online is faster and more secure than sending paper returns through the mail. As of 2018, this rule only applies to simple trust returns where there is no tax due or refund owed.
To file the T3 electronically, convert the file into XML format and upload it using the Canada Revenue Agency’s internet file transfer service. If you have any designations, agreements, or waivers to support the information on the return, mail those documents to the tax centre in the area where the legal representative of the trust resides. If the trust has a Form T1135 (Foreign Income Verification Statement), mail that separately to the address noted on the form.
Unfortunately, if the trust owes tax or deserves a refund, you need to mail a paper copy of the return to the CRA. Additionally, if you are filing a T3 for any year before 2017, you cannot e-file, and on top of that, the CRA does not allow electronic transmission of the T3 in the following situations:
- The trust doesn’t have an account number from the CRA.
- The trust is a specified investment flow-through trust.
- The trust is reporting gross-up amounts of dividends or reserves on Forms T3SCH1 or T3SCH2.
- The trust has to pay minimum tax.
- The trust is declaring bankruptcy and submitting a pre- or post-bankruptcy return.
Using e-filing is safe, simple, and straightforward. To ensure you’re ready for tax time, review the rules of electronic transmission of trust returns and make sure your clients qualify. If not, be prepared to mail the returns in advance of the due date.