Where a trust winds up, by distributing all of its property to its beneficiaries, does the T3 Return need to be filed within 90 days of the date of wind up, or does the normal (calendar) year-end govern when the tax return must be filed?
After first assuming that there was no event causing a deemed year end, CRA indicated that under s. 249(1)(b) and 249(5), the taxation year for a graduated rate estate is based on the period for which the accounts are normally made up, which would end with the final distribution date – so that the return due date is 90 days after the final distribution. For a non-GRE trust, s. 249(1)(c) defines the taxation year to be the calendar year (except as otherwise provided), so that the due date is 90 days thereafter.
Thus, if a non-GRE trust is wound up in mid-February, it might seem that the return cannot be filed until the following year. However, in fact, the T3 assessing personnel will assess such a return that is filed after the final distribution date and before the calendar year end.