The Manitoba government quietly and without announcing to the tax world or to executors, that they have increased the taxes on T3 Trust estate tax returns, retroactive to January 2025.
Most T3 Trust returns in Manitoba are used to claim the income of the $2500 CPP death benefit. This benefit could have been received by the surviving spouse or by the estate if there is no spouse.
Normally the T3 Trust taxes on the $2500 is about $450 or about 20% (for Manitoba resident estates).
One deduction on the Manitoba tax calculation has been removed. It is called the Family Tax Benefit. It would reduce the taxes by up to $200. It was a sliding scale, so the more income claimed on the trust return, the smaller the deduction would be.
All T3 Trust returns efiled up to about early August 2025 and assessed by CRA at the end of August, continued to be assessed by CRA with the MB Family Benefit as a deduction.
About mid-August 2025, CRA began assessing T3 Trust returns without the Family Tax Benefit and our executor clients started receiving T3 Notice of Assessments with amount owing about $200 more than we had efiled.
We sent in T3 adjustment requests thinking that CRA had incorrectly assessed the taxes. After three in a row with similar assessments I inquired with our tax software company about T3 taxes recently being assessed about $200 more than I expected and received the following information from them:
[[On November 6 2025, the related Bill did get Royal Assent: the Manitoba Budget Implementation and Tax Statutes Amendment Act, Subsection 4.6(16.1) of the Manitoba Income Tax Act had the paragraph in bold removed:
4.6(16.1) Subject to subsection (16.2), for a taxation year ending after 2007 an individual may claim the amount, if any, by which 9% of the individual’s income for the year is exceeded by
(a) if the individual is a trust, $2,065.; or
(b) if the individual is not a trust, the total of $2,065. and the following amounts that apply
This change is retroactive to January 1 2025 per subsection 52(4) of the bill. And appears that CRA is already assessing Manitoba T3 returns based on the bill.]]
The tax software company advised they will be updating their forms ASAP!
Upon further research, we found the info in the Manitoba March 2025 budget on page 145 of 148 pages:
Administrative Tax Measures Income Tax Act Changes are made to:
- Exclude trusts from eligibility for the Family Tax Benefit.
Tax preparers (or executors) filing T3 Trust tax returns for MB estates need to be aware and to not include the Family Tax Benefit on the MB tax schedule of the tax return. CRA will assess without the deduction and the amount owing may come as a surprise to the executor and the tax preparer.
Watch for updates from your tax software provider.
Anni Markmann is a Personal Income Tax Professional: living, working, and volunteering in our community. Contact Ste Anne Tax Service at 204.422.6631 or 36 Dawson Road in Ste Anne (near Co-op) or info@sataxes.ca