T3 beneficiaries and allocation

Updated: January 16, 2017

In TaxCycle, much of the T3 Trust return is similar to a T1 personal tax return. Many of the forms look and behave the same. However, one area that is unique to TaxCycle T3 (and likely different from your old tax software) is the flexibility you have in entering beneficiary information and in allocating income to beneficiaries. 

Enter beneficiary information

Enter name and contact information for beneficiaries on any of the following worksheets or slips. Information flows automatically between them:

  • Beneficiary Information worksheet (short name Beneficiary)
  • Beneficiary Allocation worksheet (short name Allocation)
  • Individual T3Ben slips that will be distributed to beneficiaries

The type of information available on each form differs slightly. For example, the Beneficiary worksheet provides fields to enter the address and contact information, as does the T3Ben slip. The Allocation worksheet only allows entry and editing of the name of the beneficiary. If you spot a typo or change your mind about a piece of beneficiary information, you don't need to chase down the source field. Make the change where and when you see it.

t3-data-worksheets


Allocation worksheet: Choose a beneficiary allocation method

Choose a method for allocating income to beneficiaries using the drop-down menus at the top of the Allocation worksheet. TaxCycle provides several different ways to automatically allocate income to beneficiaries (listed below), including one entirely manual method. You can also choose a different method for allocating capital gains income and all remaining income.

 Make sure to choose the allocation method here first, before deciding which amounts to tax within the trust and allocate to beneficiaries on the S9WS, below.

Choose an allocation method on the Allocation worksheet

1. Allocate equally among all beneficiaries

TaxCycle takes the amounts and divides them equally between the beneficiaries.

If you choose this method, you do not need to enter any information in the table on the Allocation worksheet. Amounts are automatically assigned to the individual T3Ben slips.

2. Allocate by assigning allocation percentage, dollar or fraction to each beneficiary

TaxCycle uses the percent, dollar amount or fraction entered for each beneficiary to determine the amounts assigned to the individual T3Ben slips.

If you choose this method, you must complete the %, $ or fraction column in the table on the Allocation worksheet. A review message will appear to remind you to do this.

Useful tips:

  • Use the same type of value for each of the beneficiaries. Do not use a dollar amount for one beneficiary and then percent for the others.
  • Fractions are especially useful if you have a designated number units for each beneficiary (for example, a unit trust). Enter the number of units/fraction for each beneficiary. TaxCycle then creates a ratio from these numbers to allocate a dollar amount to each T3Ben.
  • Double-check the total at the bottom of the column to make sure it equals 100%, or the total units or dollars available for allocation.
3. First allocate specific amount(s) to one or more beneficiaries, then divide the remainder equally among all beneficiaries

TaxCycle first allocates the specific dollar amount to each beneficiary, then takes the remaining available amount and divides it equally among ALL beneficiaries.

If you choose this method, you must enter dollar amounts in the Specific amount column in the table on the Allocation worksheet. A review message will appear to remind you to do this.

Example

A trust has the following income:

  • Investment income: $30,000
  • Business income: $100,000
  • Total income: $130,000

There are two beneficiaries. The trust document/will requires the following distribution of the income. 

  1. Pay the first $80,000 of any type of income to John
  2. Pay the next $24,000 of any type of income to Pamela
  3. Remainder income of $26,000 to be paid equally between John and Pamela, giving $13,000 to each.

On the Allocation worksheet:

  1. Choose option 3 as the allocation method.
  2. In the Specific amount column, allocate $80,000 in income to John and $24,000 to Pamela.

In the end, John and Pamela each receive the following in total:

  Specific amount Remainder equally Total received % of income received
John  $80,000 $13,000 $93,000 71.538%
Pamela  $24,000 $13,000 $37,000 28.462%
TOTAL  $104,000 $26,000 $130,000 100.000%

The above percentages are applied to each type of income.

  Investment
Income
Business
Income
Total income
reported on T3 slip
John @ 71.538%  $21,462 $71,538 $93,000
Pamela @ 28.462%  $8,538 $28,462 $37,000
TOTAL $30,000 $100,000 $130,000
4. First allocate specific amount(s) to one or more beneficiaries, then allocate the remainder by entering %, $ or fraction

TaxCycle first allocates the specific dollar amount to each beneficiary, then takes the remaining available amount and allocates it using the specified percent, dollar amount or fraction entered.

If you choose this method, you must:

  • Enter dollar amounts in the Specific amount column in the table on the Allocation worksheet. 
  • Complete the %, $ or fraction column on the Allocation worksheet to specify how to allocate the remainder.

Review messages will appear to remind you to do this.

Useful tips:

  • In the %, $ or fraction column, use the same type of value for each of the beneficiaries. Do not use a dollar amount for one beneficiary and then percent for the others.
  • Fractions are especially useful if you have a designated number units for each beneficiary (such as a unit trust). Enter the number of units/fractions for each beneficiary. TaxCycle then creates a ratio from these numbers to allocate a dollar amount to each beneficiary.
  • Double-check the total at the bottom of the column to make sure it equals 100%, or the total units or dollars available for allocation.

Example

A trust has the following income:

  • Investment income: $30,000
  • Business income: $100,000
  • Total income: $130,000

There are two beneficiaries. The trust document/will requires the following distribution of the income. 

  1. Pay the first $80,000 of any type of income to John
  2. Pay the next $24,000 of any type of income to Pamela
  3. Remainder income of $26,000 to be paid 45% to John and 65% to Pamela, giving $11,700 and $14,300 to each respectively.

On the Allocation worksheet:

  1. Choose option 4 as the allocation method.
  2. In the Specific amount column, allocate $80,000 in income to John and $24,000 to Pamela. 

In the end, John and Pamela each receive the following in total:

  Specific amount Remainder
(
45% to John 5% to Pamela)
Total received % of income received
John  $80,000 $11,700 $91,700 70.538%
Pamela  $24,000 $14,300 $38,300 29.462%
TOTAL $104,000 $26,000 $130,000 100.000%

The above percentages are applied to each type of income.

  Investment
Income
Business
Income
Total income
reported on T3 slip
John @ 70.538% $21,162 $70,538 $91,700
Pamela @ 29.462%  $8,838 $29,462 $38,300
TOTAL  $30,000 $100,000 $130,000
5. Manually allocate each type of income directly on the T3Ben

Choose this option to unlock the calculated fields on the individual T3Ben slips and enter the allocated amounts there.

A. Use the same method selected above for income allocation

For capital gains income only! In the second field on the Allocation worksheet, choose how to allocation capital gains income. Choose this option to simply continue the same allocation method as already selected (and explained above).

Choose a separate method to allocated capital gains to beneficiaries

S9WS (Schedule 9 worksheet): Decide which amounts to tax in the trust and which to allocate to beneficiaries

 Make sure to choose the allocation method on the Allocation worksheet first (see above), before deciding which amounts to tax within the trust and allocate to beneficiaries on the S9WS.

The S9WS determines the amount of income that is retained and taxed in the trust, and the amount of income to allocate to the beneficiaries. At the top of the S9WS, select the calculation options for the income and expense allocation method:

Choose the method for allocating income in the trust


  1. In the first field, decide what income to allocate to beneficiaries. TaxCycle will automatically calculate the amount to allocate to beneficiaries in the table below and any remaining income will be taxed in the trust. 
  2. If you select Allocate MANUALLY, the Income to tax in the trust column becomes editable so you can enter amounts to tax in the trust. 
  3. In the second field, choose how to apply expenses: Automatically or Manually. Choosing Manually changes many of the fields in the Apply expenses (T3RET line 41) column from calculated to data entry fields.
  4. TaxCycle uses the amounts calculated in the Allocated amounts to beneficiaries column on the Allocation worksheet.

Choose the method for allocating expenses

Allocation on the T3Ben

  1. If, on the Allocation worksheet, you select one of the options to allocate by a Fraction share or Specific amount, you can you edit these amounts directly on each beneficiary's T3Ben. Data in these fields is with the Allocation worksheet.
  2. If you select 5. Manually allocate each type of income directly on the T3Ben on the Allocation worksheet, you can allocate an amount in the table at the bottom of the T3Ben slip.

Allocating on the T3Ben