- A Canadian-resident express trust that is not a listed trust must file a T3 return.
- The T3 return is due 90 days after the trust's tax year-end, which was March 31, 2026 for a December 31, 2025 year-end.
- Most trusts pay tax at the top personal rate, but graduated rate estates and qualified disability trusts are the exceptions.
If you act as a trustee or estate trustee in Ontario, tax filings can feel like an afterthought next to the work of collecting assets and paying debts. But a trust is its own taxpayer, and the T3 return is the form the Canada Revenue Agency (CRA) uses to track it.
This article explains which trusts must file, when the return is due, what late filing can cost and why the tax rate depends on the type of trust. It is general information, not advice on your situation, so confirm the details with a lawyer or accountant before you file.
Which trusts must file a T3 return
A trust must file a T3 return if it is a Canadian-resident express trust that is not a listed trust. Whether your particular arrangement counts as an express trust depends on how it was created and on its terms, so it is worth confirming with a lawyer or accountant.
Other trusts only have to file if they meet certain conditions, such as having tax payable or being asked to file by the CRA. A trust that must file a T3 return generally must also report beneficial ownership information on Schedule 15.
For tax purposes, a testamentary trust or estate is generally one created on and because of a person's death, and an inter vivos (living) trust is any trust that is not a testamentary trust. Both kinds can have to file, so the label alone does not decide the question.
Listed trusts that are generally exempt
Some trusts are called listed trusts and are generally exempt from filing under section 150(1.2) of the Income Tax Act. Which trusts count as listed trusts depends on the categories in force for your trust's year-end, and those categories can change, so check the current CRA T3 guide for the year you are filing.
The list of listed trusts has changed over time, and the wording of the asset test and the other categories should be checked against the current CRA guidance before you rely on an exemption. If your trust is close to a limit, or holds unusual assets, ask a lawyer or accountant to confirm whether it qualifies.
The deadline and the penalties for filing late
A T3 return is due no later than 90 days after the trust's tax year-end. For a December 31, 2025 year-end, the deadline was March 31, 2026. A graduated rate estate has a deemed tax year-end on the day it stops being a graduated rate estate, which can create a filing date you did not expect.
| Situation | Late-filing penalty |
|---|---|
| Tax is owing | 5% of the unpaid tax, plus 1% of the unpaid tax for each full month the return is late, up to 12 months |
| No tax is owing | $25 a day, with a minimum of $100 and a maximum of $2,500 |
| Gross negligence or knowingly false statements (non-listed trust) | The greater of $2,500 and 5% of the highest fair market value of the trust's property |
Because a trust with no tax owing can still be penalized, it is usually worth filing on time even when you expect a nil result.
How the tax rate differs
Under section 122(1) of the Income Tax Act, a trust's taxable income is generally taxed at the highest individual rate. Graduated rate estates and qualified disability trusts are excluded from that rule. Actual rates and brackets change each year, so check the current figures.
- A graduated rate estate is the estate that arises on an individual's death, and it can only hold that status for up to 36 months after the death.
- There can be only one graduated rate estate for a deceased individual.
- The estate must designate itself as a graduated rate estate on its first T3 return and must report the deceased's Social Insurance Number on its returns during the 36-month period.
- A testamentary trust that arose on a death can be taxed at graduated rates as a qualified disability trust if it jointly elects with one or more beneficiaries on Form T3QDT and meets the other conditions.
Once the 36 months end, the estate is no longer a graduated rate estate, so a long-running estate can see its tax cost rise. That is one reason to keep an eye on timing when an estate stays open.
Bare trusts and what to do next
A bare trust is an arrangement where the trustee can reasonably be considered to act as agent for all the beneficiaries and has no significant powers or responsibilities. Bare trusts are on a separate timeline. They do not have to file a T3 return for tax years ending after December 31, 2024 and before December 31, 2026, while reportable bare trusts may have to file for years ending on or after December 31, 2026. Our separate article on bare trusts covers the exceptions in detail.
If you are a trustee, these steps usually help:
- Confirm the trust's tax year-end and write down the 90-day deadline.
- Work out whether the trust is a listed trust or must file.
- Gather the trust document, bank and investment statements and details of every beneficiary for Schedule 15.
- If it is an estate, confirm whether it is a graduated rate estate and keep the deceased's Social Insurance Number on hand.
- Ask a lawyer or accountant before the deadline if anything is unclear.
Frequently asked questions
Does every trust in Ontario have to file a T3 return?
No. A Canadian-resident express trust that is not a listed trust must file. Listed trusts are generally exempt, but which trusts qualify depends on the current wording, so it should be checked.
When is the T3 return due?
No later than 90 days after the trust's tax year-end. For a December 31, 2025 year-end, that was March 31, 2026.
What happens if I file late and no tax is owing?
The penalty is $25 a day, with a minimum of $100 and a maximum of $2,500. If tax is owing, the penalty is 5% of the unpaid tax plus 1% for each full month late, up to 12 months.
Is an estate taxed at the top rate?
Not always. A graduated rate estate is excluded from the flat top-rate rule, but it can only be a graduated rate estate for up to 36 months after the death. After that, the estate's taxable income is generally taxed at the highest individual rate under section 122(1), unless an exception such as a qualified disability trust applies.
Sources
- Canada Revenue Agency – Trust types and codes — canada.ca
- Income Tax Act, s. 122 (Justice Laws) — Justice Laws (federal)
- Canada Revenue Agency – Graduated Rate Taxation of Trusts and Estates and Related Rules — canada.ca
- Canada Revenue Agency – Tax year-end and fiscal period — canada.ca
- CRA – T3 Trust Guide (T4013) — canada.ca
- CRA – Important updates to the trust reporting requirements for the 2025 taxation year — canada.ca
- CRA – Enhanced reporting rules for trusts and bare trusts: FAQ — canada.ca
Links go to official government, court and regulator pages. The law changes — confirm you are reading the current version.
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