Guide to T1142 for Foreign Trust Distributions

What Is the T1142 Form?

Quick tip: download the official T1142 first, then fill it while following this guide: Download T1142 form (official CRA).

The T1142, officially titled "Information Return in Respect of Distributions from and Indebtedness to a Non-Resident Trust," is a form issued by the Canada Revenue Agency (CRA). It is used to report distributions received by Canadian residents from non-resident trusts, as well as any indebtedness owed by a non-resident trust to a Canadian resident.

This form is part of Canada's broader foreign reporting framework, which includes several related forms such as the T1141 for contributions to non-resident trusts and the T1135 for foreign property. Together, these forms give the CRA a comprehensive picture of Canadian residents' international financial dealings.

For newcomers to Canada who may still have financial ties to trusts established in their home countries, the T1142 is particularly relevant. Understanding when and how to file can help you avoid penalties and stay in good standing with the CRA.

Who Must File the T1142?

You are required to file a T1142 if you are a Canadian resident and you received a distribution from a non-resident trust during the tax year, or if a non-resident trust became indebted to you during the tax year. The form must be filed for each tax year in which such a distribution or indebtedness occurs.

The filing obligation applies to:

• Individuals: Canadian resident individuals who receive any distribution from a non-resident trust, whether in cash, property, or any other form.
• Corporations: Canadian corporations that receive distributions from non-resident trusts.
• Other entities: Partnerships, other trusts, and any other entity that is a Canadian resident and receives a distribution from a non-resident trust.

It is important to note that the term "distribution" is interpreted broadly. It includes not only cash payments but also the transfer of property, the provision of services, the use of trust property, and any other benefit received from the trust. Even if you did not receive a direct payment, you may still need to file if you benefited from the trust in any way.

If you are unsure whether your situation requires filing, consult the CRA's T1142 form page or seek advice from a tax professional.

When Is the T1142 Due?

The T1142 must be filed by the due date of your income tax return for the tax year in which the distribution was received or the indebtedness arose. For most individuals, the deadline is April 30 of the following year. For self-employed individuals (or those whose spouse or common-law partner is self-employed), the deadline is June 15, although taxes owed must still be paid by April 30.

For corporations, the deadline is six months after the end of the corporation's fiscal year. Late filing can result in penalties, so it is important to be aware of these dates and to file on time. If you need help tracking your tax deadlines, our guide on how to use My CRA Account online can help you stay organized.

What Information Do You Need?

To complete the T1142, you will need to gather the following information before you begin:

• Your identification details: Your full legal name, Social Insurance Number (SIN) or Business Number (BN), and current mailing address.
• Trust details: The name of the non-resident trust, the country in which it is resident, and any identification number assigned to the trust.
• Trustee information: The name and address of the trustee or trustees of the non-resident trust.
• Distribution details: A description of each distribution received, including the date, the type of property or benefit received, and the fair market value in Canadian dollars.
• Indebtedness details: If the trust became indebted to you, provide the amount of the debt, the date it arose, the terms of repayment, and any interest charged.

Organize all supporting documents, including trust statements, bank records, and correspondence from the trustee, before you start filling out the form.

Step-by-Step Instructions for Completing the T1142

Section 1: Taxpayer Identification

Enter your full legal name, SIN or BN, and mailing address. If you are filing on behalf of a corporation or partnership, use the entity's legal name and identification number. Ensure this information matches your CRA records. If you need to update your address, you can do so through My Account before filing.

Section 2: Non-Resident Trust Information

Provide the name of the non-resident trust, the country where it is considered resident for tax purposes, and any identification number assigned by a foreign tax authority. Include the full name and address of each trustee. If the trust has undergone any changes in its administration, such as a change of trustee, note the current information.

This section is critical for the CRA's ability to identify and track non-resident trust arrangements. Be thorough and accurate. If you have multiple trusts, you must file a separate T1142 for each one.

Section 3: Details of Distributions Received

For each distribution received during the tax year, provide the following information:

• The date of the distribution.
• A description of the distribution (for example, "cash distribution of $10,000 CAD" or "transfer of 50 shares of ABC Corporation").
• The fair market value of the distribution in Canadian dollars at the time it was received. Use the Bank of Canada exchange rate for the date of the distribution to convert foreign currencies.
• The nature of the distribution (income, capital, or other).

If you received multiple distributions during the year, list each one separately. There is no minimum threshold for reporting.

Section 4: Indebtedness Information

If the non-resident trust became indebted to you during the tax year, provide details of the indebtedness. This includes the date the debt arose, the principal amount, the interest rate (if any), the repayment terms, and whether any security was provided for the debt.

Indebtedness can arise in various ways, such as when a trust borrows money from a beneficiary or when a trust owes a beneficiary for services rendered. All forms of indebtedness must be reported, regardless of the amount.

Tax Implications of Non-Resident Trust Distributions

Distributions from non-resident trusts may be taxable in Canada. The tax treatment depends on the nature of the distribution and the rules of the Income Tax Act. Generally, distributions that represent income earned by the trust are taxable to the Canadian resident beneficiary. Capital distributions may also be taxable, depending on the circumstances.

It is important to report all distributions accurately on your income tax return, in addition to filing the T1142. The T1142 is an information return; it does not replace the obligation to report income from the trust on your T1 personal tax return (or T2 corporate tax return, as applicable).

If you received a distribution that is taxable, you may be entitled to a foreign tax credit if the distribution was also subject to tax in the country where the trust is resident. Consult a tax professional to determine how to claim any applicable credits. For information on related tax topics, see our guide on how to file T1243 for deemed disposition of property.

Penalties for Non-Compliance

Failing to file the T1142 on time or filing it with incomplete or inaccurate information can result in penalties. The penalty structure is similar to that for other foreign reporting forms:

• Late filing penalty: $25 per day for each day the return is late, up to a maximum of $2,500.
• Extended late filing: If the return is more than 24 months late, the penalty increases to $500 per month, up to $12,000, plus 5% of the fair market value of the distributions received.
• Gross negligence: Additional penalties may apply if the CRA determines that the failure to file was knowing or due to gross negligence.

Given the severity of these penalties, it is strongly recommended that you file on time and ensure that all information is complete and accurate. If you have previously missed a filing deadline, consider the CRA's Voluntary Disclosures Program as a potential way to reduce penalties.

How to Submit the T1142

The T1142 is typically submitted by mail to the CRA. Send the completed form to the address indicated on the form instructions, which is usually the International and Ottawa Tax Services Office. Keep a copy of the completed form and all supporting documents for your records.

As with other foreign reporting forms, the CRA recommends retaining tax records for at least six years. If you want to set up efficient methods for receiving your tax refunds and benefit payments, check out our guide on how to register for CRA direct deposit.

Tips for Newcomers

If you are a newcomer to Canada and have benefited from a non-resident trust, you should be aware of the T1142 requirement from the first year you become a Canadian resident for tax purposes. Even if the trust was established long before you moved to Canada, distributions received after you become a Canadian resident must be reported.

It is a good idea to review all of your international financial arrangements when you arrive in Canada and to consult with a tax professional who has experience with cross-border issues. You can also find helpful information in our guide on the T1161 for emigrants listing properties if you are dealing with changes in residency.

WelcomeAide is committed to helping newcomers navigate the Canadian tax system. Understanding your reporting obligations is the first step toward a smooth transition to life in Canada.

Download This Form

Before you submit anything, download the latest official file here: Download T1142 form (official CRA). Always use the latest version.

Related internal guides

• IMM 5257 guide
• IMM 1294 guide
• IMM 1295 guide
• IMM 5409 guide
• IMM 5532 guide

Official external resources

• Download T1142 form (official CRA)
• IRCC forms and guides library
• IRCC document checklists
• CRA forms and publications
• IRCC processing times