Tax in the News: CRA Blunders on Erroneous Late Filing Penalties for Trusts

The CRA has admitted to a glaring mistake involving erroneous late filing penalties on trusts—an error that should never have occurred and one that will impact the trust in communications received from their office. Buried in their release on new reporting requirements for trusts: T3 returns filed for tax years ending after December 30, 2023, their release notes “Some trusts that filed a T3 return after March 30 and before April 3, 2024 with a T3SCH15 (Beneficial Ownership Information of a Trust) have been charged a penalty in error. We are currently reassessing affected accounts to remove the penalty and a notice of reassessment will be issued.”

Understanding the Issue

The CRA recently issued a press release addressing an error concerning late filing penalties imposed on certain trusts. Specifically, trusts that submitted a T3 return between March 30 and April 3, 2024, inclusive of a T3SCH15 (Beneficial Ownership Information of a Trust), were erroneously assessed for late filing penalties. This error is not just a clerical mistake; it represents a significant oversight that could impact your trust’s financial and compliance status.

Immediate Steps to Take

Review Your Filing Status: If your trust was affected, it’s crucial to verify that you filed the T3SCH15 form within the specified dates. Documentation and precise record-keeping will be your first defense in correcting this issue.

Expect a Notice of Reassessment: The CRA has committed to reassessing affected accounts and issuing notices of reassessment. It’s important to look out for this notice and confirm that the penalty has indeed been removed as promised.

Contact CRA if Necessary: If the reassessment notice does not arrive promptly or if the penalty is not removed, it may be necessary to directly contact the CRA. Prepare to provide all relevant documentation to facilitate a swift resolution.

Broader Implications for Your Business

This incident underscores the importance of staying informed about tax obligations and changes in administration. For family-owned enterprises, the stakes are particularly high, as penalties can strain not only financial resources but also familial relationships involved in the business, as well as trust in your tax advisor (who may have filed on time and has to deal with many upset clients who erroneously receive late notice penalties).

Strategic Tax Planning Tips

Stay Informed: Regular updates from a trusted tax professional can prevent oversights and ensure your enterprise is always ahead of regulatory changes.

Professional Guidance: Engaging with a tax expert who understands the nuances of family-owned businesses can provide tailored advice beyond generic solutions.

Risk Management: Implement robust compliance checks and balances within your organization to catch potential issues before they escalate.

Conclusion

“Tell us your ambitions and we will guide you there.” This isn’t just our tagline; it’s our commitment to you. In navigating through the complexities of tax laws and administrative errors, our goal is to ensure that your family-owned enterprise thrives, unburdened by undue legal challenges. The recent CRA error is a reminder of the volatile nature of tax administration and the need for expert guidance and proactive measures.

If your trust has been impacted by this issue or if you need further clarification on how to ensure your family business remains compliant and efficient, do not hesitate to reach out. Together, we can chart a course toward a secure and prosperous financial future for your family-owned enterprise.

This information is for discussion purposes only and should not be considered professional advice. There is no guarantee or warrant of information on this site and it should be noted that rules and laws change regularly. You should consult a professional before considering implementing or taking any action based on information on this site. Call our team for a consultation before taking any action. ©2024 Shajani CPA.

Shajani CPA is a CPA Calgary, Edmonton and Red Deer firm and provides Accountant, Bookkeeping, Tax Advice and Tax Planning service.