2024-1011571C6 STEP 2024 – Q14 – T3 Trust Instalments

Principal Issues: Does the release of Form T3 INNS3 mean that the CRA plans to discontinue the administrative practice of not charging interest and penalties where a trust does not make instalment payments as required under section 156.

Position: No.

Reasons: Consistent with current administrative practice, the CRA will continue to not charge interest and penalties where a trust does not make sufficient instalment payments. If there is any change to this administrative practice in the future, information will be made available.

Author: King, William
Section: 156(1), 156.1(2)

2024 STEP CRA Roundtable – June 4, 2024

QUESTION 14. T3 Trust Instalments

In response to question 6 in the 2016 STEP CRA Roundtable (footnote 1) , the CRA noted that for the 2016 and subsequent taxation years, all inter vivos trusts and testamentary trusts (other than graduated rate estates) would be required to make instalment payments. However, the CRA also noted that consistent with the current administrative practice, the CRA would continue to not charge interest and penalties where a trust does not make sufficient instalment payments.

Earlier this year, the CRA released two new forms – the T3 INNS3, Trust Instalment Voucher and the T3AO, Trust Amount Owing Remittance Voucher. Does the release of Form T3 INNS3 mean that the CRA plans to discontinue the administrative practice noted above?

CRA Response

The CRA has been in the process of modernizing its T3 trust return processing systems over the past few years. The new instalment and remittance vouchers will ensure that payments made for a T3 account are correctly credited to the account as an instalment payment or payment of balance due. The current administrative practice will continue such that the CRA will not charge interest or penalties for insufficient instalment payments. Should this administrative practice change in the future, sufficient and timely information will be given to educate trusts on the repercussions if their instalment requirements are not met.

William King
2024-101157

Response prepared by:
T1/T3 Accounting Section
Processing Division
Individual Returns Directorate
Assessment, Benefit, and Service Branch

FOOTNOTES

Note to reader: Because of our system requirements, the footnotes contained in the original document are shown below instead:

1 See CRA document 2016-0641461C6

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