# T3 GRE Filing deadline



## CPA Candidate (Dec 15, 2013)

I am nearing the filing deadline of my late father's personal and estate taxes. I am confused over the T3 Estate GRE filing deadline.

He died Jan 16, 2018. I filed his 2017 return in July 2018, no issues.

His final return deadline is April 30, but what is his T3 Trust income filing date if all assets were distributed by August 2018? I know that the T3 must be filed within 90 days of the trust year-end.

The T3 Trust guide states

_For a testamentary trust that is a graduated rate estate, you have to file the final T3 return and pay any balance owing no later than 90 days after the trust’s wind-up (discontinuation) date. Enter the wind-up date on page 1 of the return._

I would assume the wind-up would be when the GRE ceased to have any assets left, which would be likely August 2018 with the return due in November 2018? This seems unreasonably soon. To this day, I have been issued only one slip from GoC with respect to the estate (CPP death benefit) and that came in the past few weeks.


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## AltaRed (Jun 8, 2009)

The trust doesn't have to be 'discontinued' or wound up as soon as all assets have been distributed. It can continue to and even go beyond a typical trust year end of December 31. 

A few years back, I had distributed all the assets out a testamentary trust in August. I used the following Dec 31 in the T3 Trust return as the wind up date, and filed the T3 Trust return at the end of the following March.


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## CPA Candidate (Dec 15, 2013)

AltaRed said:


> The trust doesn't have to be 'discontinued' or wound up as soon as all assets have been distributed. It can continue to and even go beyond a typical trust year end of December 31.
> 
> A few years back, I had distributed all the assets out a testamentary trust in August. I used the following Dec 31 in the T3 Trust return as the wind up date, and filed the T3 Trust return at the end of the following March.


Thanks.

Did the trust you dealt with receive dividends/interest during its existence? My father's trust would have accumulated income of probably $10,000, but I haven't received anything from his broker. I have access to his CRA account and no slips are showing their either.

The T3 guide says to estimate if you haven't received slips and amend the return later when the information is received. My father held corporate shares, shares of limited partnerships and REITs, the later 2 have complicated allocations of income and capital. I don't see how I can just wing this without provided data.

If I am correct in reading the guide, I can apply capital losses on shares incurring during the period after death until final distribution against the capital gains on the final return? This would be very beneficial.

This brings me to a related topic, the ACB of the shares I received. If I am reading correctly, it would be the FMV at the day I received the shares as opposed to the FMV at death? This seems logical if the above sentence is correct.

I wish they had taught me something about Trust returns during my days in the CPA program.


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## AltaRed (Jun 8, 2009)

CPA Candidate said:


> Thanks.
> 
> Did the trust you dealt with receive dividends/interest during its existence? My father's trust would have accumulated income of probably $10,000, but I haven't received anything from his broker. I have access to his CRA account and no slips are showing their either.
> 
> ...


Yes, dividends and interest were received but I forget the details other than if the financial institutions know of the death, the tax slips should come to the Executor in the form of "The estate of XYZ" and they thus can't show in your father's CRA MyAccount because a testamentary trust is a different person (CRA assigns a number to a trust once either a request is made by the Executor, or automatically with the filing of a T3 trust return). IOW, there is no SIN associated with a testamentary trust.

I do remember there was a tight turnaround between receiving the tax slips and the need to file the T3 return. I would think that if the tax slips for the LPs and REITs don't come in time, you can go to the websites of the specific companies and get an approximate breakdown (if not a detailed breakdown) of the amounts and types of income to at least put an estimate in the T3 Return. Remember CRA simply wants taxes paid on time so overestimate the income, resulting in an overpayment, and then file an amendment later for a refund. It has been a long time since I've seen a T5013 slip so I don't know which boxes get filled in...but I'd use something like the 'Other Income' line.

Yes, you can elect to carry back capital losses in the T3 tax return to the Final T1 return. I included a letter in each of the returns making a request for the election (and referred to the specific clause). Something to the effect, "Pursuant to Section xxx of the ITA, the undersigned elects to carry back capital losses of Y to the Final T1 Return of the Estate of ABC".

Can't answer your question on the receipt of corporate shares after death. Not clear to me what you mean. Why would shares have been received after death other than maybe extraneous dripped shares? Of which the brokerage should have shut off the drips once notified by the Executor of the death.

Added: The trust I worked on was in 2015, the year before GRE trusts started. But I think all the processes are the same, i.e. it is just that the tax tables change for subsequent years in a GRE trust to incentivize the winding up of the testamentary trust. The other option one has as trustee of the testamentary trust is to pass through all the income received in the trust to the beneficiaries on a T3 tax slip the trustee generates (also by March 31st) so that the income is taxed in the hands of the beneficiaries. However, that is really only practical when the amount and types of income are known. In your case, it is likely better for the trust to pay the various taxes.


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## CPA Candidate (Dec 15, 2013)

Regarding the ACB, I mean what ACB do I use when filing my taxes.

For instance, RY shares were $100 when he died (just using made up figures), then they enter the estate and stay there for four months. When they are finally distributed to me (transferred to my brokerage) the FMV is $98. Later in the year I sell shares, is the ACB $100 or $98? I think its $98 if the decline in value is reported in the trust and transferred to the final T1.


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## OnlyMyOpinion (Sep 1, 2013)

Just preparing a final T1 and an initial T3 GRE here as well. Some differences though, estate still has some funds remaining until CRA is fed, and all investments were received into the estate acc as cash (not in kind). I noticed yesterday that I have 3 slips CRA MyAcc still doesn't have, and they have one I don't have, and I'm aware of another that should get issued that neither of us have yet. So will complete the returns but wait on further slips.

Added: I have a T3 capital loss that I need to requeest be transfered to the final T1 as well.

Don't depend on my comment, but it sounds like the estate incurred a loss RY 100-98=2/sh and your acb is 98 - as you describe.


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## CPA Candidate (Dec 15, 2013)

OnlyMyOpinion said:


> Just preparing a final T1 and an initial T3 GRE here as well. Some differences though, estate still has some funds remaining until CRA is fed, and all investments were received into the estate acc as cash (not in kind). I noticed yesterday that I have 3 slips CRA MyAcc still doesn't have, and they have one I don't have, and I'm aware of another that should get issued that neither of us have yet. So will complete the returns but wait on further slips.
> 
> Added: I have a T3 capital loss that I need to requeest be transfered to the final T1 as well.
> 
> Don't depend on my comment, but it sounds like the estate incurred a loss RY 100-98=2/sh and your acb is 98 - as you describe.


It's a mess isn't it? I find it completely incomprehensible that an estate formed after death has a earlier filing deadline that the deceased return. I am close to turning to someone who does this for a living, as I don't have a lot of time to deal with the complexity. The T3 return guide is 76 pages long.

My father had at least 30 securities, to look up the distributions for each one and then categorize between dividend, interest, capital return, other income, etc, is a huge task.


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## AltaRed (Jun 8, 2009)

CPA Candidate said:


> Regarding the ACB, I mean what ACB do I use when filing my taxes.
> 
> For instance, RY shares were $100 when he died (just using made up figures), then they enter the estate and stay there for four months. When they are finally distributed to me (transferred to my brokerage) the FMV is $98. Later in the year I sell shares, is the ACB $100 or $98? I think its $98 if the decline in value is reported in the trust and transferred to the final T1.


I didn't have this issue because all distributions went to beneficiaries as cash, but I agree with your assessment. FWIW, I converted everything to cash in the testamentary trust as soon as I could (after probate). No way would I consider transferring securities in kind to a multitude of beneficiaries, even one beneficiary.


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## AltaRed (Jun 8, 2009)

CPA Candidate said:


> It's a mess isn't it? I find it completely incomprehensible that an estate formed after death has a earlier filing deadline that the deceased return. I am close to turning to someone who does this for a living, as I don't have a lot of time to deal with the complexity. The T3 return guide is 76 pages long.
> 
> My father had at least 30 securities, to look up the distributions for each one and then categorize between dividend, interest, capital return, other income, etc, is a huge task.


I found the T3 Trust guide a bit of an obstacle course BUT as soon as you know it is a testamentary trust rather than something like a mutual fund corporation like a TD e-fund, there is only about 10% of the guide that is relevant to testamentary trusts and it is reasonably well defined what those sections are. I went through it first with a highlighter to highlight the sections for testamentary trusts.

You, as executor, should have gotten the T5 already for any corporate securities like bank stocks (maybe Canada Post is slow?). It is only T3s and T5013s that pose the issue and I'd do the best estimate as possible, file, and amend later for corrections in investment incomes.

Added: Sometimes it is best to just hire someone when one's time is really scarce. If you've done the bulk of the work, have the Final T1 done, and know what capital loss carryback you want to take back to the T1, the bulk of the work is done and a tax accountant shouldn't be charging all that much to do 2-3 hours of work. Don't know rates these days, but maybe $750 provided a US estate "information" return doesn't have to be done as well.


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## Yasehtor (Oct 12, 2018)

The deadline for filing the T3 Return is 90 days after the one year anniversary of the date of death. In this case I believe it is April 16, 2019.

The capital loss subsequent to death needs to have a 164(6) Election needs to be made. For full details check out page 33 of CRA's T3 Return Guide. Need to file the letter making the election with the T3 and also the final T1 and they have to be filed by the deadline for filing the returns.


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## AltaRed (Jun 8, 2009)

Ahhh yes, I forgot about the anniversary thing. And yes, the letter for the capital loss carryback election must be included with both returns.

P.S. Don't be surprised if the loss carryback is NOT dealt with on the first NOA for the Final T1 Return. The Final T1 Return and the T3 Trust returns are handled by different departments in the CRA, with the Final T1 Return likely to be done first (especially if there is a backlog on processing T3 Trust returns). Thus the loss carryback won't be dealt with on the Final T1 until AFTER the T3 Trust return is processed and assessed, and then the loss carryback election goes back into the 'pile' for re-assessment of the Final T1 Return and an amended NOA. Depending on backlog, it make take a year (or more) for all this to sort out.


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## CPA Candidate (Dec 15, 2013)

Thanks, I've been going through the Trust Guide and gathering information and things are starting to fall into place; however I remain a bit confused by what I have read on the issue of capital gains/losses inside the trust.

If there were no actual sales of securities of during the period the trust existed (that is, exchange for cash in the market) are there any capital gains or losses? Is a transfer in-kind of securities to a beneficiary a capital disposition at fair market value or at cost?

The Trust Guide states; A disposition of capital property includes any of the following: (page 32)
.....
-The distribution or exchange of property (ok, capital transaction confirmed)

and it goes on to say,

_Proceeds of Distribution: (page 34)
Personal Trust - When this kind of trust distributes property to a beneficiary, and there is a resulting disposition of all or part of the beneficiary capital interest in the trust, we generally consider the trust to have received proceeds of disposition equal to the "cost amount" of the property. The cost amount of a capital property is the adjusted cost base._

The ACB to the trust would be the FMV at death and therefore this passage appears to indicate that an in-kind transfer would be at the Trust's ACB and therefore, no capital gain or loss to the trust.


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## AltaRed (Jun 8, 2009)

CPA Candidate said:


> The ACB to the trust would be the FMV at death and therefore this passage appears to indicate that an in-kind transfer would be at the Trust's ACB and therefore, no capital gain or loss to the trust.


That interpretation sounds correct, but I never did any 'transfers in kind'. So I really cannot comment. I sold all the non-cash assets and took the capital loss election. Cash is much easier to handle and carries zero risk in distributions to beneficiaries.

FWIW, unless the Executor is also a sole beneficiary, the Executor takes risk in 'holding' volatile assets. Beneficiaries could accuse the Executor of mishandling the Estate albeit that single issue is likely to be dismissed in court. At the very least, beneficiaries could be very angry with the Executor. Imagine if an Executor had held on to an Estate's equity assets (or any financial assets perhaps) in the 2008/2009 debacle and a beneficiary received 35% less than might have otherwise been the case.


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## CPA Candidate (Dec 15, 2013)

For future reference, I got the answer to my inquiry from Jamie Golombek after I sent an email (it was worth a shot).

A transfer in-kind is at cost to the trust, no tax implications, as the trust guide indicated. The beneficiaries would use FMV @ death as their ACB.


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## AltaRed (Jun 8, 2009)

Good to know for others who are going down that path.


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## CPA Candidate (Dec 15, 2013)

I sent off the T3 return yesterday. Crazy thing is I never received a slip for the dividends received during the time stocks were in the trust; I only received slips for the LP (Brookfield) and REIT he owned and interest for the bank accounts. Completely inexplicable that CIBC hasn't sent a slip for nearly 20k in dividends. I used knowledge of his portfolio and the amounts and dates of dividends to calculate it myself and sent a letter saying I calculated the amount rather than submitting a slip. I contacted my local brokerage office and they just passed me off to CIBC corporate saying they didn't have any records regarding the account anymore. 

A couple useful things I learned that could be helpful to others. If TFSAs and RRSPs are left directly to beneficiaries (bypass the will and probate), there is nothing to report on the T3 with respect to the accounts, which makes filing easier. If the TFSA increased in value between death and distribution, a slip will be issued to beneficiaries to include on their own tax returns. If the TFSA declined (my case), nothing happens.

If a RRIF increases in value, again the amount will be recorded on a slip and sent to beneficiaries for their own returns. If it decreases, (my case), the decrease in value can be claimed on the final return. CIBC was nice enough to note the difference and record the value on a slip, which will save $3k in taxes.

Another thing to look out for is when slips are issued, it is not immediately clear sometimes if they are for the final return or the estate. The labeling of the slips is inconsistent; make sure you claim them on the correct return. Having banking and transaction records can help determine when the amounts were earned and where they should be reported.


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