Tax for high net-worth individuals and their family groups

More than a personal return

A personal return is rarely the whole picture. A typical family group might include the parents and adult children, a holding company that owns the family’s investments, and a family trust. Salary, dividends, loans, and trust allocations move between them, so a decision in one entity changes the tax of another.

What the work covers

• Personal tax returns (T1) for family members, with investment income, capital gains, rental property, and income from the family’s companies and trust.
• Corporate tax returns (T2) for each holding company.
• Trusts (T3), including the annual return and beneficial ownership schedule required under the trust reporting rules.
• Foreign property reporting (T1135) when the total cost of specified foreign property is over $100,000 at any time in the year.
• T4 and T5 slips for salary and dividends paid by the companies, and T3 slips for amounts a trust allocates to beneficiaries.
• Intercompany dividends and loans, recorded the same way on both sides and reviewed before they are paid.
• Coordinated year-end planning across the family members, companies, and trust.
• Alternative minimum tax planning for years with large gains or donations.
• Registered plans: using RRSP and TFSA room sensibly alongside your company.
• Estate planning in coordination with your lawyer.

Own an operating business with family members? See Family Business Office.

Holding companies: T2 returns

Each company in the group files its own T2 return, due six months after its year-end. Where the group includes an operating company, how associated companies share the small business limit is covered on the family business office page.

Intercompany dividends and loans

Money often moves between the operating company and the holding company. A dividend from one Canadian company to another is generally received without regular corporate tax, but there are exceptions. A refundable tax (Part IV tax) can apply in some cases, for example when the paying company gets a refund of tax on its investment income, or when the receiving company owns 10% or less of the votes or value of the paying company, and an anti-avoidance rule in section 55(2) of the Income Tax Act can treat a dividend as a capital gain in some situations.

Loans between the companies, and from a company to a family member or a trust, need to be documented and recorded the same way on both sides.

A loan from a company to a shareholder, or to someone connected to one, can be included in the borrower’s income if it is not repaid in time. This includes a loan from a related company, such as a sister company, and a loan to a family trust that holds shares. The rule does not apply to loans between companies resident in Canada. See owner-managed businesses.

Slips: T4, T5, and T3

Salary paid by a company is reported on T4 slips and dividends on T5 slips (a T5 is needed when dividends to a person total $50 or more in the year); both are due by the last day of February for the previous calendar year.

A trust that allocates income to beneficiaries reports it to them on T3 slips, due 90 days after the trust’s year-end (March 31 for a December 31 year-end). No slip is needed below $100, but the beneficiary must still be told and must report the income. Amounts for a beneficiary who does not live in Canada go on an NR4 slip instead, usually with non-resident tax withheld.

Each family member’s T1 then picks up those amounts, which is why the slips and the personal returns are prepared from the same numbers. Dividends and trust allocations to family members can also be affected by the tax on split income (TOSI) rules, covered on the owner-managed businesses page.

Coordinated year-end planning

Before the year-ends, the group’s decisions are looked at together: dividends between the companies, repaying shareholder loans, and trust allocations. Doing this across all the entities at once avoids fixing one return at the expense of another.

Foreign property: the T1135

Canadian residents must file Form T1135 if the total cost of their specified foreign property was more than $100,000 at any time in the year. That includes foreign bank accounts, shares of foreign companies held outside a registered plan, and foreign real estate that is not for personal use. If the total cost stayed under $250,000 all year, a simpler reporting method is available. The form is due with your personal return, and penalties for missing it can be significant even when no tax is owing.

Alternative minimum tax (AMT) after the 2024 changes

AMT is a second tax calculation that limits how much certain deductions and credits can reduce your tax. You pay whichever is higher. From 2024 the federal rules changed: the rate went from 15% to 20.5%, the exemption rose to the start of the fourth federal bracket ($181,440 for 2026), and the base was broadened, for example by counting more of capital gains and allowing only part of many credits. A year with a large capital gain or a large donation is when AMT most often appears. AMT paid can generally be recovered against regular tax over the next seven years.

Trusts and the reporting rules

Family trusts are common in estate freezes and for holding investments. Since the 2023 tax year, most trusts must file a T3 return every year with Schedule 15, which lists the trustees, beneficiaries, settlors, and anyone with control over the trust, unless an exception applies.

The exceptions are “listed trusts”, for example a trust that has existed for less than three months or one that held assets worth $50,000 or less throughout the year. A listed trust that has to file for another reason, such as having tax to pay, does not include Schedule 15.

Bare trusts were not required to file for 2023, 2024 and 2025; the CRA says certain bare trusts may have to file for taxation years ending on or after December 31, 2026. Most trusts also face a deemed sale of their capital property every 21 years, so that date is worth planning for well ahead.

RRSPs and TFSAs

The TFSA dollar limit for 2026 is $7,000, added to unused room from earlier years. Someone who has been 18 or older and resident in Canada since 2009 and has never contributed has $109,000 of room in 2026. RRSP room is generally 18% of the previous year’s earned income, up to an annual maximum ($33,810 for 2026). If you own a company, salary creates RRSP room and dividends do not, which is one reason the salary-or-dividend decision matters (see owner-managed businesses).

Key dates in a typical tax year

1. January 1New TFSA room is added ($7,000 for 2026).
2. Early MarchRRSP contributions made in the first 60 days of the year can be deducted for the previous year. For the 2026 tax year, the deadline is March 1, 2027.
3. March 31T3 return due for most trusts with a December 31 year-end (90 days after year-end).
4. April 30Personal return (T1) due and any balance owing payable. The T1135 is due with your return.
5. June 15Filing deadline if you or your spouse or common-law partner carried on a business; any balance was still due April 30.

The link to your estate plan

At death, the Income Tax Act generally treats your capital property as sold at fair market value, unless it passes to a spouse or a spousal trust. The will and estate documents are prepared by your lawyer; the tax work is coordinated with them. For a family business, estate freezes are covered on the family business office page.

Figures are for 2026 and are set by the federal government each year. This page is general information, not advice for your situation.

Related pages: family business office, tax planning and tax returns, owner-managed businesses, audit and accounting, and all services.