In December of 2022, Bill C-32 received royal assent and new trust disclosure rules were introduced into the Tax Act, which take effect for the 2023 tax filing year. These new requirements have been written about extensively, but many have missed the specific relief to the trust reporting requirements for Indigenous trusts.
Crowe MacKay's trusted Indigenous services leads share an update on the new trust disclosure rules, highlighting the new reporting requirements and resources available to become more informed on the changes. If you require assistance, connect with us in Alberta, British Columbia, Northwest Territories, or the Yukon.
For most trusts in Canada, the new rules require that a trust file a T3 Trust Income Tax and Information Return, even if they have never filed one. In that information return, they have to include information about the trustees, beneficiaries and settlors of the trust, including their name, address, date of birth, and social insurance numbers. Canada has an excellent article with information on those requirements here.
For Indigenous Trusts, though, those requirements may not be necessary. Through lobbying and education efforts, we (NATOA and MNP) were able to seek a specific relief, given the nature and purpose of Indigenous trust.
The relief to the reporting requirements is as follows:
“..in respect of a trust, the beneficiaries of which are all of the members of an Indigenous group, community or people that holds rights recognized and affirmed by section 35 of the Constitution Act, 1982, or an identifiable class of the members of an Indigenous group, community or people that holds rights recognized and affirmed by section 35 of the Constitution Act, 1982, the person making the return provides a sufficiently detailed description of the class of beneficiaries to determine with certainty whether any particular person is a member of that class of beneficiaries.”
Many Indigenous Trusts are created as a legacy for the benefit of all members now and in the future. In those cases, the settlor is usually the First Nation, the Trustees are the community members, and the beneficiaries may include all members of that First Nation now and forever (adults and children). Even though members do not receive a direct payment from the Trust, they are all still beneficiaries through other means, such as programs or projects delivered on their behalf through the First Nation government, to supplement low funding in social, health, infrastructure and other areas. Trusts are currently the most used legal vehicle to create these legacies, to protect, release and grow the funds for all members’ benefit.
The information return in these cases would disclose the class of beneficiaries to be “members of the XX First Nation / Indian Band” just as they are listed in the Trust indenture.
Exact details of how the beneficiaries of an Indigenous Trust is disclosed will be in the 2023 T3 Trust Guide once it is released by the CRA.
For advice on Indigenous Trust Structuring, Administration and Reporting contact Vickie Whitehead.
For advice on Indigenous Taxation at the personal, business or Trust level contact Stephen Zhang.
This article has been published for general information. You should always contact your trusted advisor for specific guidance pertaining to your individual tax needs. This publication is not a substitute for obtaining personalized advice.
If you are looking for Indigenous Services, Crowe MacKay can provide you with customized, value-added advice. Our Indigenous Services professionals will take your communities financial needs into account and increase the efficiency and effectiveness of your financial operations.
