Not-For-Profits and Charities: What do the “express trust” rules mean for your organization?

Not-For-Profits and Charities: What do the “express trust” rules mean for your organization?

Over the past few years, the department of Finance has updated rules around trust reporting and increased the disclosure requirements for trusts as well as expanded the definition of entities that must file trust income tax returns. The changes impact year ends after December 30, 2023. Where not-for profits (“NFPs”) and Charities are concerned, any required trust returns would have a deemed year end of December 31st, regardless of the normal fiscal year of the organization. The first filing(s) will be due on March 30, 2024, which is 90 days after the deemed December 31, 2023 year end.

The new legislation requires a trust income tax return, or T3, to be filed for “express trusts”. Such trusts are those that are created with the settlor’s express intent, either in writing, or verbally. In a NFP or Charity context, restricted funds, endowment funds and special purpose funds, among others may fall under the definition of “express trust” resulting in a filing obligation for the organization for one or more T3’s each year. A T3 is not required for most organizations as a whole but may be required for sub-sets of assets within the organization. An exemption from filing does exist for trusts that hold less than $50,000 in certain assets throughout the year (such as cash).

In addition to reporting the assets and income of the trust, Finance now requires detailed disclosure of the name, address, date of birth, jurisdiction of residence and taxpayer identification number for trustees, beneficiaries and settlors as well as for those who have the ability to exert influence over trustee decisions. These reporting requirements may be extremely onerous for organizations that hold multiple funds in trust, or who have funds that are a result of the contributions of many donors. As well, it may be problematic for organizations to obtain the necessary information for the disclosure for funds that have been in existence for a long time. For example, a charity may be managing a restricted fund that was created 20 years ago through a donor’s bequest to the organization. Obtaining the required information regarding the donor may be difficult, if not impossible 20 years after the donation. Or, a Foundation may have dozens, or hundreds, of different restricted funds that qualify as express trusts, each of which would require a separate T3 filing.

At this time, it is recommended that Not-For-Profit Organizations and Charities review their statements of financial position for funds that may fall under this new reporting requirement. A conversation with your legal advisor and accountant now will be very important to determine your organization’s reporting responsibilities for 2024 will be very important. As this is the first year of application of these rules, it is possible that Finance will provide further guidance for organizations to which these changes apply. We will monitor Finance communications and provide updates as soon as any are available.

Don’t get caught scrambling in March 2024! Contact your advisor at Hendry Warren LLP today to discuss how these changes might apply to your organization.

Not-For-Profits and Charities: What do the "Express Trust" Rules Mean For Your Organization?
Testimonial from Rob Waterman - President at Waterman Sales Ltd.

We have been in Business since 1992 and had an accountant who was a family friend. When he retired, we needed to find a new accountant. Jacob at Hendry Warren was recommended to us through our Lawyer. We met with him and were impressed immediately; over the years we have gotten to know more of the staff and are equally impressed. They have done our company taxes, company valuations, share purchases, tax planning, covid relief, personal taxes, etc. All of which have gone very smoothly. Hendry Warren is aware of new legislation and has helped us grow as a company.

Rob Waterman (President at Waterman Sales Ltd.)
Testimonial from Lynn LaHam - CPA, CGA, Crossroads Children’s Centre

Hendry Warren is a very professional organization who are very sensitive to client needs and timelines. Marie Fraser and all of the staff that I have met and worked with exhibit the same degree of courtesy and professionalism. It is always a pleasure working with them.

Lynn LaHam ( CPA, CGA, Crossroads Children’s Centre)
Testimonial from Chris Jerome, Treasurer - Habitat for Humanity – National Capital Region

Hendry Warren LLP has been easy to work with, dependable, personable and professional and are always available when we need them. The annual audit process is efficient and timely and their staff is always knowledgeable and well prepared.

Chris Jerome, Treasurer (Habitat for Humanity – National Capital Region)
Testimonial from Don Silverman - CFO Sciemetric

From the partners to the new graduates, the quality of service and advice were second to none…we rely heavily on the advice we are given from both an audit and tax perspective…I know that our firm can count on Hendry Warren LLP to be accurate, timely and professional at all times.

Don Silverman (CFO Sciemetric)
Testimonial from Gordon Miller - President, UNIGLOBE Premiere Travel

In every instance where advice or assistance has been needed it has been provided with clarity and timeliness. And with a very satisfactory outcome. Our accounting staff have always appreciated the efficiency of Hendry-Warren team assigned to our audits and review engagements. We appreciate that Hendry-Warren LLP is able to support our needs as a paperless group of companies.

Gordon Miller (President, UNIGLOBE Premiere Travel)
Testimonial from Les Bell, - CPA, CA, President, Lincoln Heights Ford Sales Ltd.

Ian Hendry is a truly responsive and responsible partner in our business and has been for over 20 years. I would (and have) recommend his services to everyone.

Les Bell, (CPA, CA, President, Lincoln Heights Ford Sales Ltd.)
Testimonial from Colin Goodfellow - field_5cebff5066bfc

I have used Marie Fraser and her team at Hendry Warren for business, personal and special projects. Deep enough bench strength to cover anything, and small enough to pay attention.

Colin Goodfellow (field_5cebff5066bfc)
Testimonial from Rupert Bonham-Carter - field_5cebff5066bfc

Jacob has been invaluable over the past 18 months in assisting with the incorporation and start-up of my new business venture. I trust Jacob's advice on complicated income tax and HST matters to allow me to focus on what is most important - my business!

Rupert Bonham-Carter (field_5cebff5066bfc)
previous arrowprevious arrow
next arrownext arrow
PlayPause

Interested in Working with HWLLP?

How can we help you achieve your business and financial goals?

Share a few details and we'll schedule a call!

Request a Call