By Theresa L.M. Man and Adriel N. Clayton

The Canada Revenue Agency (“CRA”) released CRA View 2025-1057461E5, a technical interpretation addressing trust reporting, on December 29, 2025. The technical interpretation addresses a question that the CRA was asked about T3 trust reporting obligations of non-profit organizations whose main purpose is to provide dining, recreational, or sporting facilities, as well as who the trustee, settlor and beneficiaries of the deemed trust would be.

By way of background, a club, society or association that meets the requirements under paragraph 149(1)(l) of the Income Tax Act (“ITA”) for non-profit organizations (“NPOs”) is exempt from income tax. However, under subsection 149(5) of the ITA, if the main purpose of the NPO is to provide dining, recreational or sporting facilities for its members, then the property of the NPO is deemed to be held by a trust (“Deemed Trust”) and a T3 – Trust Income Tax and Information Return must be filed. The Deemed Trust will be taxable on the income earned from property as well as on the taxable capital gains on the disposition of property, held in the Deemed Trust, and not used to provide such services.

This CRA document clarifies a number of trust filing issues in relation to the T3 filing by such a Deemed Trust that arose in the context of this type of NPOs, in light of the application of the new trust reporting requirements in the ITA.

Firstly, the Deemed Trust constitutes a “second taxpayer” (separate and apart from the NPO), is subject to tax under Part I of the ITA in accordance with the rules in subsection 149(5), and the NPO’s property is deemed to be property of the Deemed Trust.

Secondly, the Deemed Trust must file a T3 Return. The reasons for CRA clarification are complicated.

• For background, under section 150 of the ITA, (i) trusts are required to file trust returns pursuant to paragraph 150(1)(c); (ii) paragraph 150(1.1)(b) provides that a trust need not file if it has no tax payable, taxable capital gain or disposition of capital property; and (iii) subsection 150(1.2) provides that an express trust can get certain filing relief under subsection 150(1.1) only if any of the paragraphs (a) to (p) apply.

• The CRA indicates that since a Deemed Trust is a trust other than an express trust, subsection 150(1.2) does not operate to prevent the potential application of subsection 150(1.1). Accordingly, a Deemed Trust would be required to file a T3 Return pursuant to paragraph 150(1)(c) unless any of the exceptions in paragraph 150(1.1)(b) apply.

Thirdly, when such a Deemed Trust files a T3 Return, it must include Schedule 15 with the T3 Return to provide beneficial ownership information, unless the Deemed Trust is a trust listed in any of paragraphs 150(1.2)(a) to (o).

• In this regard, subsection 150(1.2) sets out a list of trusts that are relieved from filing a T3 Return under subsection 150(1.1), where paragraph 150(1.2)(e) specifically provides that a trust that “is a club, society or association described in paragraph 149(1)(l)” is exempt from filing T3 Returns.
• Since such a Deemed Trust is subject to the subsection 149(5) rules, subsection 149(5) does not deem the trust to be organized and operated exclusively for social welfare, civic improvement, pleasure or recreation (which are requirements to be an NPO). In other words, a Deemed Trust is not deemed to be an NPO described in paragraph 149(1)(l). As a result, since the Deemed Trust is not deemed to be an NPO, it is therefore not a trust described in paragraph 150(1.2)(e).
• Accordingly, subsection 204.2(1) of the Income Tax Regulations applies to the Deemed Trust, which must file Schedule 15 when it files the T3 Return, unless it meets one of the other exceptions in paragraphs 150(1.2)(a) to (o).

Fourthly, the Deemed Trust is deemed to exist pursuant to subsection 149(5), which deems particular person(s) to be the trustee(s) of the trust having control over the trust property. However, subsection 149(5) does not deem the trust to have a settlor or beneficiaries, nor does it identify any particular person as such. A Deemed Trust therefore does not have a settlor or beneficiaries.

Lastly, the Schedule 15 must include the required information in respect of each person deemed to be a trustee of the Deemed Trust pursuant to paragraphs 149(5)(b) and (c), which provide that where the NPO is a corporation, the corporation is deemed to be the trustee of the Deemed Trust; and where the NPO is not a corporation, its officers are deemed to be the trustees.

The complex trust reporting rules have been, and are continuing to undergo, complex and convoluted amendments since 2022. It is helpful to the non-profit sector for the CRA to provide clarity on the T3 trust reporting requirements for property income of NPOs whose main purpose is to provide dining, recreational, or sporting facilities.   

​Read the January 2026 Charity & NFP Law Update