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We previously wrote on Finance Canada's proposed expansion of the reporting requirements for Canadian trusts, including the proposed expansion of the rules to capture bare trust arrangements. You can read our latest article here. The new filing and reporting requirements were proposed to apply to trusts, other than certain "exception trusts," with taxation years ending after December 30, 2022 (meaning, effectively, all trusts with a taxation year end of December 31, 2022). However, included in the Federal Government's Fall Economic Statement delivered November 3, 2022, was an announcement that the implementation of these rules would again be delayed for a further period of one year. Bill C-32, now tabled to implement the Economic Statement, proposes that the enhanced trust filing and reporting requirements apply to affected trusts with taxation years ending after December 30, 2023.
This postponement will provide Canadians who administer, or who have the power to administer, affected trusts with an additional twelve months to plan and prepare for the enhanced requirements. We had written earlier that consideration should be given to winding up trusts that no longer serve a useful purpose or have little or no activity before the new rules apply to them. That remains a useful strategy, however, to avoid multiple year ends it may be optimal to wind up those trusts effective December 31, 2022.
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