A T3 slip, the Statement of Trust Income Allocations and Designations, reports the income a trust allocated or designated to you for the year, such as dividends, capital gains, foreign income and other income. You get one from each trust you're a beneficiary of, including mutual fund trusts and income funds held outside registered accounts. Each box tells you which line of your return the amount goes on.
Most people meet the T3 through investments rather than family trusts. If you hold mutual fund units or certain funds in a regular, non-registered account, the fund company issues a T3 for what the trust passed through to you. The box guide below comes from the CRA's 2025 T3 slip, as of October 2026.
The T3 boxes most people get
| Box | Meaning | Where it goes |
|---|---|---|
| 21 | Capital gains | Line 17600 of Schedule 3, after subtracting any amount in box 30 |
| 26 | Other income | Line 13000, after subtracting any amount in box 31 |
| 32 and 50 | Taxable amount of dividends (other than eligible, and eligible) | Reported as dividend income, see line 12000 |
| 39 and 51 | Dividend tax credit (other than eligible, and eligible) | The federal dividend tax credit, see line 40425 |
| 24 | Foreign business income | Line 13500 and line 43900 of Form T2209 |
| 25 | Foreign non-business income | Line 12100 and line 43300 of Form T2209 |
| 34 | Foreign non-business income tax paid | Line 1 of Form T2209 |
| 42 | Amount resulting in cost base adjustment | Not income: adjust the cost base of your units |
Box 49 shows the actual amount of eligible dividends, while box 50 shows the grossed-up taxable amount. It's the taxable amounts in boxes 32 and 50 that you report as income, not the actual amounts.
The box people miss: return of capital
Box 42 is the one that costs people later. It represents a distribution or return of capital from the trust, and it isn't taxed when you receive it. Instead you follow the footnote instructions and reduce the adjusted cost base of the units at the end of the year. Skip that step and you'll overstate your cost when you eventually sell, which understates the capital gain. Keep a running cost base record for every fund that pays these distributions.
Other boxes worth knowing
- Box 22, lump-sum pension income: include it on line 13000. It may be transferable to an RRSP or registered pension plan.
- Box 30, capital gains eligible for deduction: relates to qualified small business corporation shares or qualified farm or fishing property, and works with Form T657.
- Box 31, qualifying pension income: include it on line 11500.
- Box 35, eligible death benefits: already in box 26, and you may be able to exclude up to $10,000 from income.
- Box 38, Part XII.2 tax credit: include it on line 45600.
- Box 48, eligible amount of charitable donations: goes on Schedule 9.
- Boxes 55 and 57: capital gains eligible for deduction from qualified farm or fishing property and qualified small business shares, with footnotes saying whether the sale was before June 25, 2024 or after June 24, 2024.
How to enter a T3 slip
- Check box 12 shows your social insurance number or business number. If it's blank, give your number to the trust or fund company as soon as possible.
- Enter the dividend boxes, using the taxable amounts in boxes 32 and 50 and claiming the credits in boxes 39 and 51.
- Put capital gains from box 21, less box 30, on Schedule 3.
- Enter other income from box 26, less box 31, on line 13000.
- Carry any foreign income and foreign tax paid to Form T2209 for the foreign tax credit.
- Read the footnotes. They carry the detail for boxes such as 21, 30 and 42, and some amounts only make sense with them.
T3 versus the slips around it
A T3 is for income passed through a trust. Interest and dividends paid to you directly by a bank or corporation come on a T5 slip instead, and pension or other income from a payer arrives on a T4A slip. If you hold the same kind of investment in both a registered and a non-registered account, only the non-registered holding produces a T3.
Common T3 mistakes
- Reporting box 49 instead of box 50. The actual dividend isn't what's taxed; the grossed-up taxable amount is.
- Forgetting to subtract box 30 from box 21, or box 31 from box 26, so the same income ends up counted twice.
- Ignoring the foreign tax in box 34. If you don't carry it to Form T2209, you can't get credit for tax that's already been paid abroad.
- Treating a return of capital in box 42 as income, or forgetting it altogether, which leaves your cost base wrong for the day you sell.
- Leaving a late slip off the return. If one hasn't arrived and you know the fund paid you, ask the fund company before you file.
None of these are exotic. They're the slips people rush through because the fund company's statement looks tidy, and the CRA gets a copy of every T3 the trust issues, so a missed or mis-entered box usually comes back as a reassessment.
If the slip looks wrong
Funds sometimes issue amended T3 slips when the trust's final figures change. If you've filed and an amended slip arrives, change your return to match the new figures rather than ignoring it, because the CRA receives the same amended information. Before that, compare the slip against your annual statement: the distribution amounts should line up even though the slip splits them into tax categories.
The verdict
A T3 looks intimidating because it has so many boxes, but most investors only use a handful: dividends, capital gains, other income, foreign income and box 42. Enter the taxable amounts, not the actual ones, read every footnote, and keep a cost base record for any fund that pays a return of capital. That last habit is what saves you from paying the wrong tax years from now.
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Frequently asked questions
What is a T3 slip?
It's the Statement of Trust Income Allocations and Designations, which reports the income a trust, such as a mutual fund trust, allocated or designated to you for the year.
Why did I get a T3 slip?
You were a beneficiary of a trust, often a mutual fund trust or income fund held in a non-registered account, that passed income through to you.
Where do I report T3 box 21?
Subtract any amount in box 30 from box 21 and include the difference on line 17600 of Schedule 3.
Is T3 box 42 taxable?
No. Box 42 is a return of capital. You reduce the adjusted cost base of your units by following the footnote instructions.
What is the difference between box 49 and box 50 on a T3?
Box 49 is the actual amount of eligible dividends. Box 50 is the taxable amount, and that's the figure you report as income.
