Handling miscellaneous expenses in a T3 return

triopsman · ‎March 30, 2023

My wife and I will be filing a T3 return for a trust, and we are unsure how or whether miscellaneous expenses ought to be reported. The trust has a bank account associated with it that is used to distribute funds to the beneficiary. The account has monthly fees associated with it, and I'm unsure how to account for them in the T3. They are clearly not "Carrying charges and interest expenses," as they are not incurred to generate income or to manage investments. Should they be considered "Trustee fees," because they are needed for the management of the trust? Or perhaps they should be accounted for under "Value of other benefits to a beneficiary," since they are being incurred as part of the process of covering personal and living expenses to the beneficiary.

Any thoughts?

janisbossenberry · ‎March 30, 2023

Many years ago, when I used to do T3's for family trusts, we used to put them into carrying charges, along with the accounting fees. The other two options you mentioned should not be used. However, if you have no income in the trust, then any expenses you record will also not be needed. What is the source of the cash used for the distributions?

triopsman · ‎March 30, 2023

The cash comes from dividends, capital gains and interest from an investment account - though if that was insufficient, some of the principal would be distributed as well. But as I said, the bank account isn't being used to earn that income, so I had thought reporting them as carrying charges would not be appropriate.