On the AJAG Blog: A Routine Family Trust…or a Potential Notifiable Transaction?

— June 23, 2026 —

Would You Have Thought About This?

The recently introduced notifiable transaction rules continue to show just how much scrutiny is now required in ordinary tax planning. A useful example emerged from the 2 June 2026 STEP roundtable, where CRA gave a preliminary response to a question on NT 2023-02. The significance of the exchange was not that it involved an obviously aggressive structure. Rather, it was that a fairly conventional trust arrangement was enough to raise a legitimate mandatory disclosure question.

That is the real takeaway for Canadian tax practitioners and taxpayers alike: these provisions require a level of vigilance that may go well beyond what many would have expected when first encountering them.

The fact pattern raised at the 2 June 2026 STEP roundtable

The scenario put to CRA was straightforward. A family trust was settled with beneficiaries that included Canadian corporations owned by one of the named individual beneficiaries. At the time the trust was settled, there was a possibility that this individual beneficiary might later attend university in the United States and, as a result, might become a non-resident of Canada. The question was whether that possibility, on its own, meant that Form RC312 had to be filed within 90 days of the trust’s settlement on the basis that the arrangement could eventually form part of a transaction or series described in NT 2023-02. A related question was whether, if a filing had been made at the outset describing the possible future series, that initial disclosure would be sufficient such that no amended filing would later be required if events unfolded as described.

A useful example of the new level of scrutiny

At first glance, this does not necessarily read like a mandatory disclosure issue. There is no immediate emigration, no immediate distribution, and no immediate implementation of a tax-driven series. It is simply a trust structure established in circumstances where future events may unfold in a particular way.

And yet the question was whether this fact pattern could engage NT 2023-02, which concerns certain transactions involving an indirect transfer of trust property to a non-resident through a Canadian-resident corporate beneficiary, particularly where the arrangement may avoid or defer:

the 21-year deemed realization rule in subsection 104(4), or
the application of subsections 107(5) and 107(2.1).

That this question arises at all is telling. It reflects the breadth of the analytical lens that these rules now require.

CRA’s response: no filing yet, but the issue is real

CRA’s preliminary response was that, on these facts alone, Form RC312 was not required within 90 days of the trust’s settlement.

The reason was straightforward. At the time of settlement:

no person had yet entered into a transaction or series that was the same as or substantially similar to the designated transaction or designated series, and
no person had yet become contractually obligated to enter into such a transaction or series.

The mere possibility that a beneficiary may later emigrate from Canada was not enough, by itself, to trigger the reporting obligation.

That clarification is helpful. It confirms that the notifiable transaction rules do not apply simply because a structure could someday be used in a way that resembles a designated transaction. There must be something more concrete than a future possibility.

Why this still matters

The significance of CRA’s response is not that the trust settlement escaped reporting. The significance is that the question had to be asked in the first place.

This is precisely the kind of scenario that illustrates the current compliance environment. A practitioner reviewing a trust settlement today may correctly conclude that no reporting obligation exists at that moment. But the analysis cannot necessarily stop there.

If later facts develop such that:

the beneficiary becomes a non-resident, and
trust property is distributed under subsection 107(2) to a Canadian corporation owned by that beneficiary,

then the arrangement may begin to resemble the designated transaction described in NT 2023-02, and a filing obligation may arise at that later point.

In other words, what appears unremarkable at inception may still require ongoing monitoring because later developments can change the characterization of the arrangement for mandatory disclosure purposes.

The broader lesson under the new rules

This example is a reminder that the mandatory disclosure provisions are not limited to obviously aggressive tax planning. They require practitioners to examine ordinary structures with a much more deliberate eye toward:

contingent future events,
changes in residency,
trust distributions,
the use of corporate beneficiaries, and
whether a series of transactions may become substantially similar to a designated notifiable transaction.

That is a meaningful shift in practice.

Historically, many advisors might have focused primarily on whether a transaction was substantively supportable under the Act. That remains essential, of course. But the mandatory disclosure regime adds another layer: whether the transaction, or a developing series of transactions, gives rise to a separate reporting obligation even where the planning itself may not initially appear unusual.

No easy answer through an early “protective” filing

The second question posed to CRA also underscores how careful the analysis must be. The taxpayer asked whether, if an RC312 had been filed at the time of settlement describing the possible future series, that initial disclosure would satisfy the reporting obligation for later transactions in the series, such that no amended filing would be required.

CRA’s response was effectively that this did not solve the issue, because the reporting obligation had not yet arisen at the time of settlement. CRA also noted that paragraph 69 of its Mandatory Disclosure Rules guidance assumes that a valid reporting obligation already exists in respect of the disclosed transaction or series.

This is another important practical point. The challenge is not only identifying whether a transaction may become reportable. It is also determining when the statutory obligation actually arises.

A practical wake-up call

The real message here is not that anyone should have immediately viewed this trust settlement as a clear notifiable transaction. Rather, the message is that these provisions now demand a higher level of attentiveness than many ordinary planning situations have historically required.

That is why this scenario is such a useful example.

It shows that practitioners need to become increasingly familiar with the mandatory disclosure rules and build them into their ongoing review of trust and corporate structures. It also shows that taxpayers should not assume that a transaction is outside the reporting regime simply because it appears routine at the outset.

The compliance risk may lie not in the initial implementation, but in failing to revisit the arrangement when material facts change.

Final thought

Besides the more familiar reporting obligations and income tax implications that can arise when an individual emigrates from Canada, would you also have identified the broader notifiable transaction issue in this fact pattern?

If not, that is precisely the point.

The lesson from the 2 June 2026 STEP roundtable is not that this was an obvious filing case from day one. It is that the mandatory disclosure rules now require practitioners and taxpayers to think more broadly, and more carefully, about how ordinary facts may intersect with designated transactions as circumstances evolve.

If this scenario did not immediately bring the notifiable transaction regime to mind, a review of these provisions may well be in order.