Late filing of graduated rate estate trust designation

T3
1

I hope everyone is doing well despite all the challenges we’re facing this year!

I have a client who is late dealing with an estate for an individual who passed away on 5.20.2019.

The latest possible filing deadline for a GRE T3/designation would have passed by this point. I’m aware of late filing penalties that will occur; however, another potential issue is that during my research I’ve found a few mentions indicating that a GRE designation made on the first T3 cannot be late filed. Wondering if anyone has dealt with this situation before?

The mentions re: this do not indicate where this restriction comes from, and looking at the definition of a GRE in the Act, there is also no mention of a restriction on late filings.

If we can’t late file the GRE designation, there would be significant tax planning implications as I beleive it would revert to a top-rate testamentary trust, and force us into an earlier Dec 31 year end. Before reaching out to a specialist, I thought I’d ask the community.

Any thoughts would be much appreciated!

2

I have filed late GRE T3 returns on a number of occasions with no issues.

3

Thanks Arliss! That’s great to hear, really appreciate you taking the time to share.

4

This is the most recent example I can find of a comment re: the GRE designation and a limitation on late filing. I found similar comments from about 4 similar kinds of online sources when I started looking:

https://mailchi.mp/osullivanlaw/test-advisory-estate-and-trust-taxation-important-considerations-1329385?e=efb053d40c&utm_source=Mondaq&utm_medium=syndication&utm_campaign=LinkedIn-integration

“Another issue to bear in mind is that GRE designations cannot be late-filed by executors, and an estate may therefore miss the opportunity of a GRE designation if the executors fail to make the necessary designation on the first estate tax filing or if they make the first estate tax filing late.”

It sounds like the CRA just ignored this potential issue when they assessed the T3’s you filed Arliss? Out of curiosity, did they have any GRE specific items in the assessments, such as non-calendar year ends or income taxed at graduated rates in the trust? I just wonder if the CRA might enforce the late filing limitation in certain cases, particularly if there is income being taxed in the trust.

Any further thoughts would be much appreciated if you can spare the time!

5

Interesting.

In my cases they are non-calendar year ends and income was taxed in the trust.

Late filing penalties were assessed and there have been subsequent filings for the trusts.

6

Strange, CRA clearly accepts some late filed designations then. Thanks again for taking the time to respond, if I find anything that shed lights on this I’ll post it here.