Please see parts 1-3 in our previous posts.
STEP 2: Does a trust return need to be filed?
After determining that a bare trust arrangement exists, it is important to determine whether an exception from filing a trust return is available.
Some of the more common exceptions include the following:
- trusts in existence for less than three months at the end of the year;
- trusts holding only assets within a prescribed listing that is very restrictive (such items in the listing include cash and publicly listed shares) with a total fair market value that does not exceed $50,000 at any time in the year;
- trusts required by law or under rules of professional conduct to hold funds related to the activity regulated thereunder, excluding any trust that is maintained as a separate trust for a particular client (this applies to a lawyer’s general trust account, but not specific client accounts); and
- registered charities and non-profit clubs, societies or associations.
A trust return must be filed if one of the exceptions are not met. Even where one of the new exceptions is met, a trust would still have to file a return if they had to file under the prior rules, such as the trust having taxes payable or having disposed of capital property.
Find out about the steps in our next posts.
*The preceding information is for educational purposes only. As it is impossible to include all situations, circumstances and exceptions, a further review should be done by a qualified professional. No individual or organization involved in either the preparation or distribution of this text accepts any contractual, tortious, or any other form of liability for its contents.
For any questions, give us a call.
Do you need to prepare your records for year-end and for tax filing?
Let us help!
We offer a wide range of services, including bookkeeping, financial reporting, payroll processing, tax planning and more.
Get started with a free consultation to learn more!
