Client has an inter vivos trust, category ID 334. Beneficiaries are client, client’s spouse, children, children’s spouses, and grandchildren. These, along with the settlor, were all reported on the 2023 schedule 15. The 2025 return has been assessed a penalty for not providing schedule 15.
For each of 2024 and 2025, TaxCycle indicated that the prior year’s data would be carried forward. But, schedule 15 is blank for both of those years. The Beneficial Owners On File form has the 2023 information, but that form does not substitute for schedule 15, and the Beneficial Owners On File form is not transmitted to CRA.
In previous posts on this topic, TaxCycle staff have advised that the sch.15 need not be filed when there have been no changes. But, this is not one of the exceptions listed by CRA.
The 90-day deadline to register a formal dispute is July 8.
I will be filing the objection prior to July 8, but how do I word it? “TaxCycle said I don’t have to submit it”. Think that’ll sway CRA? Anyone have any advice?
You still have to file Schedule 15 and answer the question:
Has the beneficail ownership information of the trust changed?..
Yes No
Did you answer NO with Schedule 15?
I’ve heard that if CRA receives a Sch 15 and it wasn’t necessary, they are required to destroy it, due to privacy regulations. So, even if a Sch 15 was needed in 2023, if it wasn’t needed in 2024, CRA would not retain the info. You need to submit a Sch 15 again.
Then CRA should have assessed a penalty for 2024. For 2023, they purged the sch.15 info due to their interpretation of privacy laws. So, when I answered “no” in 2024, they had already deleted the 2023 info. The TaxCycle schedule said the info would be carried forward, but it was not. It is available on another form, but that form is not transmitted, nor does it substitute for a sch.25. I’d say TaxCycle dropped the ball on this one. I’d like to think I can get the penalty refunded, but that’ll take months.
In the first year a trust is required to file a Schedule 15, it must be fully completed.
In subsequent years, you only need to complete the first 2 questions and provide details of any changes.
If no changes were made, then you answer No to the 2 questions and that is what is transmitted to CRA with the T3 return:
CRA has told us that in their system, they will automatically copy what they have on file from the previous year to the current year that they are assessing and then apply any changes indicated on Schedule 15.
If both 2023 and 2024 were assessed as having received Schedule 15 (no penalties for not having filed it), then, if both questions were answered No, it appears that their automatic data copy failed for some reason when they assessed the 2025 return
If that is the case, asking CRA to check their system is the way to go, writing to them to ask for an adjustment to remove the penalties as they are unjustified.