What is a T3 slip for?

A T3 slip reports income from trusts, including mutual fund trusts, ETFs, income trusts, and estate distributions. If you hold mutual funds or ETFs outside a registered account (RRSP, TFSA), you'll likely receive a T3.

Why did I get a T3 slip when I didn't sell anything?

Mutual funds and ETFs distribute income (dividends, interest, capital gains) to unitholders even if you didn't sell. These distributions are taxable whether you reinvested them or not. The T3 reports this income.

Do I have to report T3 income if I reinvested it?

Yes. Reinvested distributions are still taxable in the year received. The reinvestment increases your adjusted cost base (ACB), which reduces your capital gain when you eventually sell. You must report the T3 amounts.

T3 Slip Explained: Trust Income and How to Report It (2026)

What Is a T3 Slip?

Feature	Details
Full name	Statement of Trust Income Allocations and Designations
Issued by	Trusts (mutual funds, ETFs, income trusts, estates)
Reports	Income allocated to you from the trust
Due date	Last day of March (90 days after year-end)
Common sources	Mutual funds, ETFs, REITs, estate distributions

Common T3 Boxes Explained

Income Types

Box	Description	Tax Treatment
21	Capital gains	50% inclusion rate
23	Actual eligible dividends	Gross-up + credit
25	Foreign non-business income	Full inclusion
26	Other income	Full inclusion
32	Other eligible dividends	Gross-up + credit
49	Actual other than eligible dividends	Gross-up + credit

Capital Gains (Box 21)

What It Is	Treatment
Capital gains distributed by fund	—
Only 50% taxable	Called “taxable capital gains”
Example: $200 in Box 21	Report $100 taxable

Eligible Dividends (Box 23/32)

What It Is	Treatment
Canadian dividends from large corporations	—
Gross-up	38%
Dividend tax credit	~15% federal + provincial
Net effect	Taxed at lower rate

Foreign Income (Box 25)

What It Is	Treatment
Dividends from foreign stocks	—
Tax treatment	Fully taxable
Foreign tax paid (Box 34)	May claim foreign tax credit

Return of Capital (Box 42)

What It Is	Treatment
Return of your own investment	—
Not taxable now	—
ACB reduction	Reduces your cost base
Impact	Higher capital gain when you sell

How to Report T3 Income

On Your Tax Return

T3 Box	Tax Return Line
Box 21 (capital gains)	Schedule 3, Line 17400
Box 23 (eligible dividends)	Line 12000
Box 25 (foreign income)	Line 12100
Box 26 (other income)	Line 13000

Step-by-Step

Step	Action
1	Gather all T3 slips
2	Check amounts against statements
3	Enter each box on appropriate line
4	Calculate gross-up for dividends
5	Claim dividend tax credit
6	Claim foreign tax credit (if applicable)

T3 vs T5

Slip	Source	Common For
T3	Trusts	Mutual funds, ETFs, REITs
T5	Corporations	Bank interest, stock dividends

Same Investment, Different Slip

Investment Type	Slip You Get
Bank savings account	T5
Bank mutual fund	T3
Stock (individual)	T5
ETF	T3
REIT	T3

Common T3 Situations

Mutual Funds

Distribution Type	Box
Canadian dividends	23 or 32
Interest income	26
Capital gains	21
Foreign income	25
Return of capital	42

ETFs

ETF Type	Common Distributions
Canadian equity ETF	Canadian dividends (Box 23)
US equity ETF	Foreign income (Box 25)
Bond ETF	Interest (Box 26)
Balanced ETF	Mix of above

REITs

Distribution Type	Treatment
Return of capital (common)	Not taxable, reduces ACB
Interest income	Fully taxable
Capital gains	50% taxable
Dividends	Gross-up and credit

Adjusting Your ACB

Why It Matters

When You Sell	Your capital gain =
Proceeds	What you sold for
Minus ACB	Original cost + all reinvested distributions - return of capital
Equals gain	Taxable at 50% inclusion

Return of Capital Tracking

Year	ROC (Box 42)	Starting ACB	Ending ACB
2024	$50	$1,000	$950
2025	$60	$950	$890
2026	$55	$890	$835

When you sell: ACB is $835, not $1,000.

Reinvested Distributions

Year	Distribution	Reinvested	New ACB
2024	$100	$100	$1,100
2025	$120	$120	$1,220
2026	$115	$115	$1,335

When you sell: ACB is $1,335, not $1,000.

Late T3 Slips

Why They’re Late

Reason	Impact
Due 90 days after trust year-end	March deadline
Complex calculations	Funds need time
You may need to wait	Don’t file too early

What to Do

Situation	Action
Slip arrives after you filed	Amend return (T1-ADJ)
Slip never arrives	Contact fund company
Amounts seem wrong	Verify with statements

Foreign Tax Credit (Box 34)

If You Have Foreign Income

Step	Action
1	Note foreign tax paid (Box 34)
2	Complete Form T2209
3	Claim credit on Line 40500
4	Reduces your Canadian tax

Tax Software Tips

Tip	Details
Enter exactly	Match boxes precisely
Multiple T3s	Some software aggregates
Auto-import	CRA Auto-fill or broker import
Check ACB	Software may not track ROC