'Bare Trusts' – Changes to Trust Reporting

The Canada Revenue Agency implemented new regulations effective December 31, 2024, concerning bare trust documentation.

What is a Bare Trust?

A bare trust represents a fiduciary arrangement where the trustee's sole responsibility involves managing property according to beneficiary instructions. The legal title of the trust property is held by the trustee, but the beneficiary has the beneficial ownership of the property.

Common Applications

Bare trusts serve multiple purposes: securing mortgages by adding family members to title; transferring asset ownership for probate planning without altering beneficial interests; and holding investments for minor children unable to hold legal title independently.

Reporting Obligations

Beginning with tax years after December 30, 2023, bare trust trustees must file annual T3 trust returns. Additionally, trustees must complete T3 Schedule 15, reporting detailed stakeholder information including trustees, beneficiaries, settlors, and protectors.

For questions, contact 1-800-959-8281.