The federal government has finalized revised reporting rules for bare trusts. While the new rules are significantly narrower than those originally proposed, certain bare trust arrangements may still have a filing obligation beginning with the 2026 taxation year.
No Filing Requirements for 2023, 2024, or 2025
The Canada Revenue Agency (CRA) has confirmed that bare trusts are generally not required to file a T3 Trust Income Tax and Information Return or Schedule 15 for the 2023, 2024, or 2025 taxation years, unless specifically requested to do so by the CRA. The government provided this relief while it reviewed concerns about the practical application of the expanded reporting requirements.
What Is a Bare Trust?
A bare trust generally exists when one person holds legal title to property while another person retains the beneficial ownership and receives the benefits associated with the property. The legal owner typically acts only on the instructions of the beneficial owner.
Examples of arrangements that may involve a bare trust include:
- A parent holding an “in trust for” investment account for a child.
- A nominee corporation holding title to real estate on behalf of another person or business.
- Assets registered in one person’s name where another person is the true beneficial owner.
- Certain real estate ownership structures where legal and beneficial ownership differ.
New Reporting Requirements Beginning in 2026
Beginning with the 2026 taxation year, certain bare trust arrangements may be required to file:
- A T3 Trust Income Tax and Information Return
- Schedule 15, Beneficial Ownership Information of a Trust
For most calendar-year trusts, the first filing deadline will be March 31, 2027.
The filing requires detailed information regarding trustees, beneficiaries and other individuals connected to the trust arrangement, including names, addresses, dates of birth, and taxpayer identification numbers.
Important Exemptions Under the Revised Rules
The revised legislation specifically excludes many common family and personal arrangements that originally raised concerns among taxpayers.
Examples of exemptions include:
- Trusts that have existed for less than three months at year end.
- Trusts holding certain assets valued at $50,000 or less throughout the year.
- Certain family trusts with assets not exceeding $250,000 that hold only specified types of property.
- Joint ownership arrangements where all legal owners are also beneficial owners.
- Certain principal residence arrangements involving related family members.
- Certain partnership arrangements where a general partner holds legal title on behalf of a partnership.
- Graduated rate estates, qualified disability trusts, registered charities, mutual fund trusts and certain other regulated trusts.
The CRA’s guidance also confirms that ordinary joint ownership arrangements are generally not intended to be subject to the enhanced reporting rules where all owners have both legal and beneficial ownership interests. This provides welcome relief for many common family banking and property arrangements.
Arrangements That May Still Require Reporting
Despite the expanded exemptions, some arrangements may continue to be reportable, including:
- Nominee corporations holding legal title to real estate.
- Bare trustees holding property for joint ventures.
- Certain co-ownership arrangements where legal and beneficial ownership differ.
- Other nominee arrangements involving a separation between legal and beneficial ownership.
Whether an arrangement is reportable will depend on its specific facts and whether one of the legislative exemptions applies.
Potential Penalties
Where a filing is required, failure to file may result in penalties of up to $2,500 per year. In certain circumstances involving gross negligence, penalties may be significantly higher.
What Should You Do Now?
Although many taxpayers will ultimately qualify for an exemption, now is a good time to review any ownership arrangements where the legal owner and beneficial owner may not be the same.
This may include:
- Real estate held through nominee structures.
- Jointly owned property.
- Family trust accounts.
- Corporate ownership structures involving nominee shareholders or title holders.
Determining whether an exemption applies is not always straightforward, and proper documentation will be important if the CRA reviews the arrangement.
For more information, refer to the CRA’s guidance on Enhanced Reporting Rules for Trusts and Bare Trusts and contact our team to discuss your specific circumstances.