Revised draft legislation on proposed trust reporting rules

On February 4, 2022, Finance Canada released draft legislation that included revisions to the trust reporting rules that were originally announced in the 2018 Federal Budget. The rules generally apply in the same manner as originally announced and include a deferral of the rules for one year. Specific changes include:

  • the rules will now apply for taxation years that end after December 30, 2022
  • subsection 104(1) of the Income Tax Act (reference to a trust or estate) has been amended to refer to section 150 
  • a specific exception has been provided to ensure that information that is subject to solicitor-client privilege does not have to be disclosed
  • a reference to trusts where all the units of which are listed on a designated stock exchange has been added as a specific exception and also under the exception for trusts which hold assets having a value of $50,000 or less under proposed paragraph 150(1.1)(b)
  • proposed subsection 150(1.3) has been added to ensure that so-called bare trustee arrangements are subject to the rules (arrangements under which the trust can reasonably be considered to act as agent for all the beneficiaries under the trust with respect to all dealings with all of the trust's property).

It should also be noted that the Quebec government has also deferred the new reporting rules for Quebec tax purposes for one year.

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