“Bare” Trusts – You May Have New Reporting Requirements With The CRA

The rules governing which types of trust arrangements must file a T3 Trust Income Tax and Information Return have been changed as of December 31, 2023. There are now new requirements for trusts to file, including some that previously did not have this obligation, such as bare trusts. 

What is a Bare Trust?

A “Bare Trust”, while not formally defined, is a trust arrangement where the trustee essentially acts as an agent for the trust’s beneficiaries with respect to the trust’s property. This can be the case even when the trustee has no significant powers or responsibilities, but simply holds legal title to the property. Some common examples affecting individuals include:

  • Financial or property gifts to a someone who cannot hold legal title;
  • A parent/guardian going on title for a property with a minor to help obtain financing;
  • An adult child/individual on title for a property in their parent’s name to help with estate planning.

Identifying a Bare Trust:

  1. Beneficial Ownership: Within a bare trust, the beneficiary keeps full ownership of the property despite who is on title.
  2. Passive Trustee: The trustee does not do anything with the property unless the beneficiary says so. Their role is limited to following the beneficiary’s instructions and acting accordingly.
  3. No Duty of Care:  Other trusts have the requirement of a trustee to exercise a duty of care regarding trust’s property – bare trustees do not. Their responsibilities are limited to following the beneficiary’s instructions as noted above.

Filing Deadline

The filing deadline for trust returns are 90 days after the trust’s year-end, which is commonly December 31st. Filing for these trusts would need to be completed by March 31st to avoid penalties.

Please Note

The information noted above is intended to summarize changes that may affect our personal tax clients and to highlight the potential need for filing. Please reach out to our offices if you believe you have a filing obligation and we will be happy to discuss your specific situation.

There are changes affecting other forms aside from Bare Trusts, which can be found here: