Estate T3 Trust Return for Executors in Ontario: Deadlines

If you are the executor of an estate that keeps earning money after the death, such as interest, dividends or rent, the estate may need to file its own T3 trust return. That return is different from the final personal return for the person who died.

This article explains when a T3 is needed, how the year-end is set and when it is due. Every estate is different, so a lawyer or accountant can confirm how this applies to yours.

T3 return versus the final T1 return

Two kinds of returns often get mixed up. The final T1 return reports the deceased person's income up to the date of death. The T3 reports income earned by the estate after death.

For the final T1, a death from January 1 to October 31 means the return is due April 30 of the following year, and a death from November 1 to December 31 means it is due 6 months after the death. If the deceased, or a spouse or common-law partner living with them, was running a business on the date of death, the filing deadline moves to June 15 of the following year for deaths from January 1 to December 15, although payment is still due on the regular date.

As the legal representative, you must file all required returns for the deceased and make sure any balance owing is paid before you distribute the estate.

Does the estate have to file a T3?

A trust must file a T3 if it has total income from all sources of more than $500. It must also file, even at $500 or less, if it makes a capital distribution to beneficiaries. These filing rules changed for trust tax years ending on or after December 31, 2023, so older advice you find online may be out of date.

If you are unsure whether a small amount of interest or a one-time payout triggers a filing, ask an accountant before you assume nothing is needed.

Choosing the year-end

Most trusts must use a December 31 year-end. A graduated rate estate (GRE) is the exception, because it may have a non-calendar tax year.

An estate can be a graduated rate estate for no more than 36 months after the death. How your estate is treated once that period ends depends on the facts, so it is worth confirming with an accountant. Because the year-end you pick affects when everything is due, it is also worth discussing the choice with an accountant before the first return.

Due date and what to include

The T3 return must be filed no later than 90 days after the trust's tax year-end. Any balance owing is due within the same 90 days.

If the estate pays executor fees, it must also file a T4 Summary and the related T4 slips. Fees paid to an executor who is not acting in the course of a business are income from an office or employment, reported in box 14 of a T4 with CPP and income tax deducted but no EI. A professional executor acting in the course of a business earns business income, reported on a T4A instead.

What to do next

• Note the date of death and decide whether the estate qualifies as a graduated rate estate.
• Keep a running record of all income the estate earns after death.
• Work out the year-end with an accountant and put the 90-day deadline in your calendar.
• File the final T1 on time and pay any balance owing.
• Do not distribute the estate until you have checked what tax is still owing.

Missing a deadline or guessing at a year-end can lead to problems that are hard to unwind, so a short conversation with a lawyer or accountant early on is usually worthwhile.

Frequently asked questions