How do I complete T3 Schedule 9 for income allocated to beneficiaries?
On the 2025 form, T3 Schedule 9 splits trust income paid or payable to beneficiaries by type: taxable capital gains on line 921, actual dividends on lines 923 and 949, foreign income on lines 924 and 925, other income on line 926. Line 928 totals them and can't exceed income before allocations. Each beneficiary's share becomes a T3 slip.
Which Schedule 9 line feeds which T3 slip box?
Part A of Schedule 9 (lines 921 to 928, plus 949) allocates the income; Part B (lines 930 to 951) carries the designations that keep a credit or deduction alive, such as the dividend tax credit, foreign tax paid or pension income canada.ca. Every beneficiary's share of a line then goes into a fixed box on the T3 slip
canada.ca.
| Schedule 9 line | What it holds | T3 slip box |
|---|---|---|
| 921 | Taxable capital gains | Box 21 = share of line 921 × 2 |
| 922 | Lump sum pension income that qualifies for transfer to an RPP or RRSP | Box 22 |
| 923 | Actual dividends other than eligible | Box 23; box 32 = box 23 × 1.15; box 39 = 9.0301% of box 32 |
| 924 | Foreign business income | Box 24 |
| 925 | Foreign non business income | Box 25 |
| 926 | Other income: interest, business, rental, pension, death benefits, retiring allowances | Box 26 |
| 928 | Total of lines 921 to 926 plus 949 | No box; capped at income before allocations |
| 930 | Eligible taxable capital gains (QSBC shares, farm or fishing property) | Box 30 = line 930 × 2 |
| 931 | Qualifying pension income | Box 31 (also inside box 26) |
| 933 and 934 | Foreign business and non business income tax paid | Boxes 33 and 34 |
| 935 | Eligible death benefits | Box 35 (also inside box 26) |
| 937 | Insurance segregated fund net capital losses | Box 37 = line 937 × 2 |
| 938 | Part XII.2 tax credit | Box 38 |
| 942 | Amount resulting in a cost base adjustment | Box 42 |
| 949 | Actual eligible dividends | Box 49; box 50 = box 49 × 1.38; box 51 = 15.0198% of box 50 |
The two lines that trip preparers are 921 and the dividend lines. Line 921 is already the taxable half, so the slip doubles it back to the full gain in box 21, and the beneficiary's Schedule 3 halves it again at the 50% inclusion rate canada.ca. Lines 923 and 949 take the actual dividends; the gross up and the credit are worked out on the slip, at the same rates as the 2026 dividend gross up. Where each box lands on the T1 is on the T3 slip boxes page.
Only a personal trust completes line 930 and box 30, and lines 930 1B and 930 2B split those gains between farm or fishing property and QSBC shares for boxes 55 and 57 canada.ca. As of October 2026, the 2025 edition is the latest Schedule 9 the CRA has posted
canada.ca.
What counts as paid or payable by the year end?
Only income paid or payable to a beneficiary in the year belongs on Schedule 9, and the trust deducts it under subsection 104(6). Under subsection 104(24), an amount isn't payable in a year unless it was paid in the year or the beneficiary was entitled in that year to enforce payment of it laws-lois.justice.gc.ca. A trustee resolution after December 31 is too late for that year.
The CRA lets a trust allocate income in three cases: the trust document entitles the beneficiary to it in the year it's earned, the trust makes a preferred beneficiary election, or the trustee uses a discretion to pay it in the year canada.ca. Income the trust can't deduct stays off Schedule 9 entirely.
A minor is the exception. Income held for a beneficiary who hadn't turned 21 before the year end is deemed payable under subsection 104(18) when its conditions are met, even though nothing was paid and the child can't enforce payment laws-lois.justice.gc.ca. Allocations to a minor or to an adult child of a family business owner can also trigger TOSI on the beneficiary's return.
Upkeep, maintenance and property taxes the trust pays on a property a beneficiary uses, and the value of other benefits to a beneficiary, are added back on the T3 return and then allocated to the beneficiary like income canada.ca.
Which column does each beneficiary go in?
Schedule 9 has three allocation columns, and the column decides which slip the beneficiary gets canada.ca.
| Column | Who | Slip |
|---|---|---|
| 1 | Resident beneficiaries, income paid or payable | T3 slip |
| 2 | Non resident beneficiaries, income paid or payable | NR4 slip, income code 11 (58 for taxable Canadian property gains) |
| 3 | Preferred beneficiary election | A separate T3 slip |
Column 2 amounts go in before Part XII.2 tax is deducted, most of them attract Part XIII withholding, and the column total also goes on line 15 of Schedule 10 canada.ca. The withholding rates and the other NR4 codes have their own page.
Column 3 is for accumulating income kept in the trust. The trust and a preferred beneficiary jointly elect under subsection 104(14) to tax it in the beneficiary's hands for that year laws-lois.justice.gc.ca. The beneficiary must be resident in Canada and either qualify for the disability amount, or be 18 or older, dependent on someone because of an impairment and have income no higher than the basic personal amount. They must also be the settlor, the settlor's spouse or former spouse, or a child, grandchild or great grandchild of the settlor (or that person's spouse)
canada.ca.
The election is a statement signed by the trustee and the beneficiary (or guardian), showing the beneficiary's SIN, relationship to the settlor and disability or dependency status. It's due no later than 90 days after the trust's year end, and a late election leaves the accumulating income taxed in the trust canada.ca.
How does $55,000 of trust income reach two T3 slips?
A family trust with a December 31 year end earned $40,000 of eligible dividends, a $20,000 capital gain ($10,000 taxable) and $5,000 of interest. Before December 31, the trustees resolved to make all of it payable in equal shares to two adult beneficiaries resident in Canada, Maya and Theo. Everything goes in column 1.
| Line or box | Trust total | Maya | Theo |
|---|---|---|---|
| Line 921, taxable capital gains | $10,000 | $5,000 | $5,000 |
| Line 926, other income (interest) | $5,000 | $2,500 | $2,500 |
| Line 949, actual eligible dividends | $40,000 | $20,000 | $20,000 |
| Line 928, total allocations | $55,000 | $27,500 | $27,500 |
| Box 21 (line 921 share × 2) | $10,000 | $10,000 | |
| Box 26 | $2,500 | $2,500 | |
| Box 49 | $20,000 | $20,000 | |
| Box 50 (box 49 × 1.38) | $27,600 | $27,600 | |
| Box 51 (15.0198% of box 50) | $4,145.46 | $4,145.46 |
Line 928 is $55,000 ($10,000 + $5,000 + $40,000), which doesn't exceed the trust's income before allocations, so the whole amount is deducted and the trust's taxable income is nil canada.ca. The dividends enter line 928 at their actual amount; the $15,200 of gross up appears only on the slips. If the trustees had missed the year end on the interest, that $5,000 would have stayed in the trust at the top federal rate, which is 33% for 2026
canada.ca, or $1,650.
When should the trust keep the income with a 104(13.1) designation?
Use the designation when the trust has losses or deductions to absorb. Subsection 104(13.1) lets the trust treat income paid or payable as not paid, so it's taxed in the trust; 104(13.2) does the same for taxable capital gains laws-lois.justice.gc.ca. The trust claims the designation on its T3 return and can't deduct that income, and each beneficiary's allocation drops by their proportional share
canada.ca.
The limit is subsection 104(13.3): the designation is invalid if the trust's taxable income for the year would be more than nil laws-lois.justice.gc.ca. In practice you designate only enough to use up the loss carryforward and no more. Any income left in a trust that isn't a graduated rate estate or qualified disability trust is taxed at the highest individual percentage under subsection 122(1)
laws-lois.justice.gc.ca; the trust tax rate page covers the provincial top rates.
The trust must also send the CRA a statement showing the income and the amount designated for each beneficiary canada.ca.
Which Schedule 9 errors push the slips off?
| Mistake | What goes wrong | Fix |
|---|---|---|
| Full capital gain on line 921 | Box 21 shows double the real gain | Enter the taxable half; the slip multiplies by 2 |
| Grossed up dividends on line 923 or 949 | The gross up is applied twice | Enter the actual dividends |
| Foreign income net of withholding on 924 or 925 | Income understated, credit lost | Enter it before withholding, tax paid on 933 or 934 |
| Line 928 above income before allocations | The deduction is overclaimed | Allocate only what the trust earned after expenses |
| Non resident on a T3 slip | Part XIII withholding missed | Column 2 and an NR4 slip |
| Resolution signed in January | Income was not payable in the year | Pass it on or before the year end |
Trust expenses come off the income they relate to before you allocate it, so a fee paid to earn interest reduces line 926, not the dividends canada.ca. Then check that each beneficiary's slip boxes add back to their column share of every line.
Sources
Is T3 Schedule 9 the same as Schedule 9 on the T1?
Does the trust need a slip for a beneficiary allocated $80?
No. A T3 slip isn't required when the income allocated to a beneficiary for the year is less than $100, but the trust must still tell the beneficiary, who reports it, and it still files the T3 Summary canada.ca. A slip is also required for a capital distribution that adjusts the beneficiary's cost base, even with no income.
When are the T3 slips from Schedule 9 due?
Within 90 days after the trust's year end, at the beneficiary's last known address. A late slip costs $25 a day, at least $100 and at most $2,500 per failure canada.ca. For a December 31, 2026 year end that's March 31, 2027, the same day as the return on the T3 filing deadline page.
General information for the tax year shown, not advice for a specific client. Confirm the facts before you file or remit.