Residence of a Trust
As a rule, we consider that a trust is resident in Québec or in Canada if the trustee is resident in Québec or in Canada.
However, we may consider that a trust is resident in Québec even if the trustee is not resident in Québec, but it is shown that a large portion of the control and administration of the trust's property is entrusted to a person, other than the trustee, who is resident in Québec.
Where certain legislative provisions apply only if the trust was resident in Canada throughout the year, the trust is deemed to have met this condition if it was resident in Canada immediately before it ceased to exist.
Trusts that must file an income tax return
As a rule, a resident trust or a deemed resident trust must file an income tax return for a taxation year.
The term “resident trust” means any trust described under Types of Trusts that is subject to Québec income tax for a given taxation year because it is in one of the following situations:
- It is resident in Québec at the end of the year.
- It is resident in Canada, outside Québec, at the end of the year and it operates a business in Québec during the year.
A resident trust or a deemed resident has to file an income tax return even if it has no income tax payable in the following situations:
- The trust has no income tax payable for the year solely because it carried forward a loss from a previous year.
- The trust has to report a capital gain on property it sold in the year.
- The trust granted a beneficiary a benefit valued at more than $100 for upkeep and maintenance expenses and taxes on property the beneficiary used.
- The trust received income, gains or benefits intended for a beneficiary who is an individual resident in Québec or a corporation that has an establishment in Québec, and the total income shown on line 63 of its return is more than $500 or the income attributable to a beneficiary is more than $100.
- The trust is a trust other than an excluded trust and:
- in calculating its income, it is deducting an amount allocated to a beneficiary that is more than $100, whether the beneficiary is resident in Québec or elsewhere;
- it is resident in Québec on the last day of the taxation year and the total of the cost amounts of the property it owns at some time in the year is more than $250,000;
- it is resident outside Québec on the last day of the taxation year and the total of the cost amounts of the property it owns at some time in the year and uses in operating a business in Québec is more than $250,000.
- The trust is not listed under “Trusts not required to file an income tax return” below.
Trusts not required to file an income tax return
For taxation years ending after December 30, 2023, the following trust types, even if they are resident trusts or deemed resident trusts, are not required to file an income tax return, provided they have no tax liability:
- trusts that have existed for less than three months;
- trusts that hold property with a fair market value of less than $50,000 throughout the taxation year, if the only assets they hold over the year are one or more of the following:
- certain government debt securities,
- a share, debt or right listed on a designated stock exchange,
- a share of the capital stock of a mutual fund corporation,
- a share of a mutual fund trust,
- an interest in a related segregated fund trust,
- an interest as a beneficiary under a trust whose units are all listed on a designated stock exchange;
- trusts that are required under rules of professional conduct or the laws of Canada or a province to hold funds for the purpose of carrying on any activity that is regulated under those rules or laws, provided the trusts are not administered as separate trusts for a particular client or particular clients (an exception is made for general trust accounts held by an attorney, but not for specific client accounts);
- trusts that are registered charities;
- trusts that are non-profit organizations;
- mutual fund trusts;
- segregated fund trusts;
- trusts whose units are all listed on a designated stock exchange;
- master trusts;
- graduated rate estates (GREs);
- qualified disability trusts (QDTs);
- employee life and health trusts;
- certain government funded trusts;
- trusts established under a deferred profit sharing plan (DPSP), pooled registered pension plan (PRPP), registered disability savings plan (RDSP), registered education savings plan (RESP), registered pension plan (RPP), registered retirement income fund (RRIF), registered retirement savings plan (RRSP), tax-free savings account (TFSA), employee profit-sharing plan (EPSP), registered supplementary unemployment benefit plan (RSUBP) or tax-free first home savings account (FHSA), or governed by such a plan;
- cemetery care trusts and trusts governed by an eligible funeral arrangement.
- A trust that is normally exempted from filing an income tax return may have to file one for taxation years ending after December 30, 2023 (see Exemption From Filing the Trust Income Tax Return).
- A trust (other than an excluded trust) that is resident in Canada, outside Québec, at the end of a taxation year and that, at some time in the year, was the owner of a specified immovable (or a member of a partnership that owned such an immovable) must file form TP-646.1-V, Trust Information Return.
- For taxation years ending after December 30, 2021, testamentary trusts and successions other than GREs are no longer considered to be excluded trusts and are therefore required to file an information return.