A T3 tax form is a Canadian document used to report income earned by a trust. The name covers two related items: the T3 return, which is the trust’s own income tax filing prepared by the trustee, and the T3 slip, which the trustee issues to each beneficiary showing their share of the trust’s income for the year. If a mutual fund, REIT, or family trust paid income to you, you’ll get a slip. If you’re the trustee, you file the return and issue the slips.
The Return and the Slip Are Different Documents
People say “T3” without saying which one they mean, and the distinction matters. The T3 Trust Income Tax and Information Return is the trust’s tax return. It calculates whether the trust itself owes tax and reports what was allocated out to beneficiaries. The T3 slip, formally the Statement of Trust Income Allocations and Designations, is what the trustee sends to each beneficiary so they can report their share on their personal T1 return.1Canada Revenue Agency. Trust Information Returns – Slips and Summaries
A trustee isn’t required to issue a slip to a beneficiary who received less than $100 of allocated income in the year, but that beneficiary still has to report the income.2Canada Revenue Agency. T3 Trust Guide – 2025 Slips go to the beneficiary in duplicate, with copies filed to the CRA along with a T3 Summary.
Why You Might Receive a T3 Slip
Most people who get a T3 slip in the mail aren’t beneficiaries of a family trust. They’re investors who hold units in something that is legally a trust. The common sources are:
- Mutual funds held in a non-registered brokerage account. These distribute interest, dividends, and capital gains to unitholders, and those distributions show up on a T3 even if you didn’t sell anything.
- Real estate investment trusts, which pass rental income and capital gains from property holdings through to investors.
- Family trusts set up for estate planning or asset protection.
- Testamentary trusts, which can arise from an estate when someone dies and the estate continues to earn income.3Canada.ca. Prepare Tax Returns for Someone Who Died
Investments held inside registered accounts like RRSPs, TFSAs, or RRIFs do not generate T3 slips, because those accounts are tax-sheltered. You’ll only see slips for holdings in taxable, non-registered accounts.
Reading the Boxes on Your T3 Slip
The slip has numbered boxes that sort income by type. The right box goes on the right line of your personal return, and if you’re using tax software it will place them for you once you enter the amounts. A few boxes carry most of the weight.
Box 21 – Capital gains. Your share of the trust’s capital gains. The taxable portion (at the 50% inclusion rate) goes on Schedule 3 of your T1 return.4Canada Revenue Agency. T3 Statement of Trust Income Allocations and Designations – Slip Information for Individuals
Box 26 – Other income. A catch-all for interest, net rental income, business income, retiring allowances, and pension income that don’t have dedicated boxes. Reported on line 13000.5Canada Revenue Agency. How to Fill Out the T3 Slip
Boxes 23 and 49 – Dividends. Box 23 shows ordinary (non-eligible) dividends; Box 49 shows eligible dividends from Canadian corporations. Both get grossed up on your return, and the matching federal dividend tax credits sit in Boxes 39 and 51.4Canada Revenue Agency. T3 Statement of Trust Income Allocations and Designations – Slip Information for Individuals Miss those credit boxes and you overpay.
Who Has to File a T3 Return
Filing rules split trusts into two groups. Express trusts resident in Canada must file every year, even in a year when the trust earned no income. All other trusts, including non-resident trusts, must file for any year in which they have tax payable, dispose of capital property, realize a taxable capital gain, or allocate more than $100 of income to any single beneficiary.6Canada Revenue Agency. Who Should File – Filing a Trust’s T3 Return The full list is longer, but those are the situations that catch most trustees.
Every trust is identified by a trust account number: the letter T followed by eight digits. If a first return is filed on paper without a pre-assigned number, the CRA issues one and includes it on the notice of assessment.2Canada Revenue Agency. T3 Trust Guide – 2025 That number belongs on all future filings and correspondence. Trustees also need each beneficiary’s Social Insurance Number to complete the slips.7Canada Revenue Agency. Social Insurance Number
Forms are available from the CRA website, and certified tax software will populate them for you.8Canada Revenue Agency. T3 Statement of Trust Income Allocations and Designations Software is the practical route because the return runs across multiple schedules that have to reconcile. Electronic filing goes through the T3 EFILE system and is processed faster than paper.9Canada Revenue Agency. T3 EFILE Information
Bare Trusts
Bare trusts have been a moving target. For the 2024 and 2025 tax years, bare trusts do not have to file a T3 return or Schedule 15.10Canada Revenue Agency. Enhanced Reporting Rules for Trusts and Bare Trusts For tax years ending on or after December 31, 2026, certain bare trusts will be required to file.11Canada Revenue Agency. What Has Changed – Filing a Trust’s T3 Return If you hold property as a bare trustee for someone else, watch for the CRA’s guidance as the rule takes effect.
Deadlines and Penalties
The T3 return, the related slips, and the T3 Summary are all due no later than 90 days after the trust’s tax year-end, and any balance owing is due on the same date.12Canada Revenue Agency. When to File – Filing a Trust’s T3 Return Most trusts must use a December 31 year-end, which puts the practical deadline at the end of March. A graduated rate estate is the only trust type allowed to use a non-calendar year-end.
Missing the deadline triggers a penalty of 5% of the unpaid tax plus 1% of the unpaid tax for each full month the return is late, up to 12 months. If the CRA already assessed a late-filing penalty in any of the three preceding years and issued a demand to file, those figures double to 10% plus 2% per month, up to 20 months.2Canada Revenue Agency. T3 Trust Guide – 2025
A trust that owes no tax still gets penalized for filing late. The alternative penalty is $25 per day, with a minimum of $100 and a maximum of $2,500.2Canada Revenue Agency. T3 Trust Guide – 2025 So a nil return that sits on someone’s desk for three months is not free.
After processing, the CRA issues a notice of assessment for the trust. Keep it. The CRA can reassess within three years of the original assessment, or four years for mutual fund trusts.2Canada Revenue Agency. T3 Trust Guide – 2025
If You’re a US Person Receiving Canadian Trust Income
The T3 slip covers the Canadian side. It does not satisfy US reporting. The IRS treats most Canadian trusts as foreign trusts, which can pull US recipients into filing Form 3520, Form 3520-A, FBAR (FinCEN Form 114), and Form 8938, with penalties that start at the greater of $10,000 or a percentage of the transfer, distribution, or trust assets involved.13Internal Revenue Service. Reminder to US Owners of a Foreign Trust14Internal Revenue Service. Instructions for Form 3520 Canadian RRSPs and RRIFs are exempt from Form 3520-A under Rev. Proc. 2014-55; other Canadian trusts are not. Canadian tax paid on the same income can generally be claimed as a foreign tax credit on Form 1116 to reduce double taxation.15Internal Revenue Service. Foreign Tax Credit (Individual, Estate, or Trust) If any of that applies to you, get advice from a cross-border tax preparer before your US filing deadline.