As part of Canada Revenue Agency’s increased focus on tax compliance for trusts and estates, in the last couple of years it has made the following additions to its compliance program:
· Ontario Region Trust and Estates Coordinator – the person in this position is tasked with, among other things, coordinating and prioritizing the estates and trusts related tax issues that concern the province;
· Regional Trust Team – this team is engaging in substantial audit activity in the Golden Horseshoe region, concentrating on Mississauga, Hamilton, Kitchener, London and Windsor; and
· Related Party Initiative – this initiative focuses on high net-worth persons with net assets of $50 million or more, and who have 30 or more related economic entities (including trusts, corporations, partnerships, joint ventures and private foundations).
We can expect an increased number of CRA trust audits. It would seem given the decision in Antle v. Canada (where a trust was deemed invalid) that auditors will be concerned with the particulars of how a trust was set up. They will also look to whether it is being properly maintained (e.g. that tax filings are being done in compliance with the legislation).
This is something to keep in mind for estates and trusts lawyers, especially since CRA may perform reassessments that could result in additional tax, interest and penalties.
Thanks for reading and have a good day,