Does an Estate Need Its Own CRA Trust Account Number for a T3?

After someone dies, the estate can earn income of its own, such as interest, dividends or rent, before it is paid out to the beneficiaries. That income is often reported on a trust return, and the CRA treats the estate as a separate filer from the person who died.

This article explains when an estate needs to file a T3 and so needs its own trust account number, how to get one, and the deadlines to keep in mind. The answer depends on the estate, so confirm the details with a lawyer or accountant.

What the T3 return is for

The T3 Trust Income Tax and Information Return reports income the estate earns after death that has not been paid to beneficiaries. Post-death income is reported in later years until the estate's property is fully distributed. The T3 is separate from the deceased's final T1 return, which must be filed for every person who dies.

A T3 is not needed if the only post-death income is reported by a beneficiary, such as a CPP or QPP death benefit.

When a T3 is required

The CRA lists several triggers for filing a T3.

• The trust has tax payable.
• It allocates income to beneficiaries and has income over $500.
• It allocates more than $100 to any one beneficiary.
• It makes a capital distribution.
• It allocates income to a non-resident beneficiary.

A T3 may not be needed if the estate is distributed right after death or earns no income before distribution, although the final T1 is still required. If you are not sure whether your estate crosses these lines, ask a lawyer or accountant before assuming no return is needed.

How to get a trust account number

You need a trust account number to file a T3 return. There are two routes: get it instantly through the Trust Account Registration online service, or complete Form T3APP, Application for a Trust Account Number.

Either way, you must provide a signed copy of the trust document or the last will and testament. Have the will ready, and make sure you have the authority to act for the estate, before you start.

Graduated rate estates and year-ends

An estate can be a graduated rate estate (GRE) for up to 36 months after the individual's death. It must arise on and as a consequence of death, remain a testamentary trust, and designate itself as the GRE in its T3 return for its first tax year ending after 2015. Only one estate can be the GRE of an individual, and the deceased's SIN must be on its T3 returns.

A GRE can use a non-calendar tax year, unlike other trusts, which generally must use a December 31 year-end. It has a deemed tax year-end on the day it ceases to be a GRE, no later than the end of the 36-month period after death. Choosing a year-end affects when your T3 deadline falls, so decide it with your advisor.

Deadlines and penalties

A T3 return is due no later than 90 days after the trust's tax year-end, and any balance owing is due by the same date. For a GRE that is wound up, the final T3 and balance are due 90 days after the wind-up date, which is the date of final distribution of assets.

An alternative late-filing penalty of $25 per day late, with a minimum of $100 and a maximum of $2,500, may apply even with no balance owing. Getting the account number early avoids a last-minute scramble.

What to do next

• Keep a record of all income the estate earns after the date of death.
• Decide whether any T3 trigger applies, with help if needed.
• Gather a signed copy of the will and your proof of authority.
• Register online or complete Form T3APP to get the trust account number.
• Confirm the estate's tax year-end with your advisor, then note the T3 deadline of 90 days after it.
• Before distributing, remember the clearance certificate requirement.

A legal representative who distributes property without a clearance certificate is personally liable for unpaid amounts up to the value of the property distributed. Request the certificate only after returns are filed and assessed and taxes are paid or secured.

Frequently asked questions