Low-Cost Trust Distribution Planning for Trusts and Estates in Canada

As the rules stand for the 2025 tax year filed in 2026, the late-filing penalty is 5% of the balance owing plus 1% of that balance for each full month the return is late, to a maximum of 12 months, so 17% at worst. It rises to 10% plus 2% per month for up to 20 months, a 50% maximum, but only where the CRA formally demanded the return and had already charged a late-filing penalty for any of the three preceding tax years. Interest compounds daily.

If you owe nothing, no penalty applies, but a refund and benefit payments such as the Canada child benefit and the GST/HST credit are held up until the return is processed. If you owe, a late-filing penalty is charged and interest runs on the balance and compounds daily from the day after the due date. For the 2025 tax year the deadline was 30 April 2026. File even if you cannot pay, because the penalty is driven by filing, not payment.

Contact your municipality’s tax or revenue office and ask for a reissued bill; most cities also let you view and pay it in an online property tax account set up with your roll number. Not receiving the bill does not cancel the obligation or stop late-payment charges, so ask for the amount and due dates straight away. Update your mailing address, and check whether your lender already pays the tax through your mortgage.

Generally no. Fees for wills, powers of attorney, estate freezes and succession advice are personal or capital in nature, so they are not deductible against your income. Narrow exceptions exist: amounts incurred to earn business or property income, or costs an estate or trust pays to administer property, may be claimable. Fees tied to acquiring or disposing of capital property usually adjust the cost base or proceeds instead. Ask for an itemised invoice so each part can be tested.

Sign in to My Business Account: the nine-digit number sits at the top, with a suffix for each program account, such as the GST/HST or payroll one. It is also printed on every CRA notice, remittance voucher and letter about the business, and on your GST/HST return. To confirm another company, use the federal or provincial corporate registry and the CRA's GST/HST registry search. The CRA will not read a business number out to a third party.

Most goods and services carry GST or HST: 5% GST, or 13% HST in Ontario, 15% in New Brunswick, Newfoundland and Labrador and Prince Edward Island, and 14% in Nova Scotia since 1 April 2025. Basic groceries, prescription drugs and medical devices are zero-rated, so no tax applies but the seller still claims input credits. Rent, most health care and tuition are exempt. Provincial sales taxes add a second layer in some provinces.

A trust files its own T3 return and pays tax on income it retains, generally at the top personal rate for most inter vivos trusts. Income paid or made payable to a beneficiary is instead deducted by the trust and taxed in the beneficiary's hands, keeping the character of the income, such as dividends or capital gains. Graduated-rate estates and qualified disability trusts use graduated rates. No calculator captures this; the allocation decisions drive the result.

Filing a GST/HST return late while money is owing brings a penalty calculated from the balance owing and the number of months the return is overdue, plus interest compounded daily. Filing late with nothing owing normally carries no penalty, though a return the CRA formally demanded does. File even when you cannot pay: filing stops the late-filing side from growing while you arrange the balance or a payment plan.

Yes, line 10100 is your employment income, mainly the total of box 14 from each T4. A T4A is not employment income: it reports other amounts such as pensions, scholarships, self-employed commissions or fees for services, and those go on different lines. Employment income can exceed your salary because taxable benefits, bonuses, employer-reported tips and certain allowances are included in box 14. The amount is gross, before income tax, CPP and EI are withheld.

The unpaid balance keeps building compound daily interest at the CRA's prescribed rate until it is cleared, and it does not disappear when you file again; any new refund is applied against it first. Once collections start the CRA can also offset benefit payments, garnish wages or freeze an account. File the next return on time regardless, then set up a payment arrangement you can keep. If penalties and interest came from circumstances beyond your control, request relief on an RC4288.

Your required repayment is the outstanding Home Buyers' Plan balance divided by the number of years left in your repayment period, so it falls if you repay more than the minimum. The CRA works it out for you and shows it on your notice of assessment and in My Account. Repayments begin after a grace period, and you designate a contribution already made to your RRSP as the repayment on the HBP schedule. Any shortfall is added to that year's income.

Either of you can claim it, or you can split it between you, but the total claimed for one qualifying home cannot exceed the maximum allowed for that home, so there is no doubling up. It is usually simplest for the spouse with enough tax payable to claim the whole amount. You also must not have lived in a home you or your spouse owned during a defined look-back period; the window and the current amount are on CRA's home buyers' amount page.