Bare Trust Reporting : It’s Here!

Tuesday, August 25th, 2026

BARE TRUST REPORTING: It’s Here!

New rules aimed at increasing transparency regarding the beneficial ownership of assets held through bare trust arrangements have been enacted and will apply to taxation years ending on and after December 31, 2026. These changes may catch many individuals and businesses that are unaware of their trust-like relationships, exposing them to potential penalties and other consequences for non-compliance.

A trust arrangement generally exists where the registered owner of an asset holds legal title on behalf of another person or entity that is the true beneficial owner. Where the trustee has no independent power or discretion over the property, the arrangement will typically be considered a bare trust arrangement. Historically, bare trust arrangements were not subject to T3 filing requirements. However, starting 2026, if a bare trust exists at any time during the year, the bare trustee may be required to file T3 return and Schedule 15. While certain exceptions may apply, many arrangements that were previously outside of the trust reporting requirements will now be required to file.

Does a bare trust arrangement exist?

To determine if a bare trust arrangement exists, the following question should be asked:

Who is the legal owner of the property/asset? Typically, this is the person who is on legal title of the asset or who holds the asset.
Who is the beneficial owner of the property/asset? This is the person who has the rights and obligations of the property/asset. For example, in the case of real estate, who has the right to use, collect rent and direct its disposition? Who has the obligation to maintain the property and pay the associated costs, such as taxes? Who is entitled to the proceeds on a sale of the property and who funded its acquisition?

If the legal owner differs from the beneficial owner, then a bare trust arrangement likely exists.

There are several reasons why an individual, business or organization may use a bare trust arrangement. Many parties involved in a bare trust arrangement may not realize that they are, much less that there may be a filing requirement with CRA. No lawyer may ever have been involved, and no written agreement may ever have been drafted. However, failure to comply with the trust reporting requirements could result in significant penalties.

While there are countless possibilities of bare trust arrangements, the following are some common examples. Certain exceptions may apply to the scenarios described below; these are fact-specific and should be discussed with us to determine their applicability

Individual Reasons

a parent is on title of a child’s home (without the parent having beneficial ownership) to assist the child in obtaining a mortgage;
a parent or grandparent holds an investment or bank account in trust for a child or grandchild;
one spouse is on title of a house, although the other spouse is at least a partial beneficial owner;

Estate Planning Reasons

a child is on title of a parent’s home (without the child having beneficial ownership) for estate planning/probate/capacity purposes;
a child is on title of a parent’s financial accounts (or other assets) to assist with administration after the parent’s passing;

Business Administration Reasons

a corporate bank account is opened by the shareholders, with the corporation being the beneficial owner of the funds;
a corporation is on title of an individual’s real estate, vehicle or other asset, and vice-versa;
assets registered to one corporation but are beneficially owned by a related corporation;
use of a nominee corporation for real estate development purposes;
a partner of a partnership holding a bank account or asset for the benefit of all the other partners of a partnership;
a joint venture arrangement where the operator holds legal title to development property as an agent for the benefit of other participants;
a cost-sharing arrangement where a person holds a business bank account, or other assets, to facilitate the arrangement while having no, or only partial, beneficial interest in these shared assets;

Industry-specific Issues

a property management company holding operational bank accounts in trust for their clients, or individuals managing properties for other corporations holding bank accounts for those other corporations; and
a lawyer’s specific or general trust account.

Does a trust return need to be filed?

After determining that a bare trust arrangement exists, it is important to determine whether an exception from filing a trust return is available.

Some of the more common exceptions include the following:

trusts in existence for less than three months at the end of the year;
trusts holding only assets within a prescribed listing that is very restrictive (such items in the listing include cash and publicly listed shares) with a total fair market value that does not exceed $50,000 at any time in the year;
trusts required by law or under rules of professional conduct to hold funds related to the activity regulated thereunder, excluding any trust that is maintained as a separate trust for a particular client (this applies to a lawyer’s general trust account, but not specific client accounts); and
registered charities and non-profit clubs, societies or associations.

A trust return must be filed if one of the exceptions are not met. Even where one of the new exceptions is met, a trust would still have to file a return if they had to file under the prior rules, such as the trust having taxes payable or having disposed of capital property.

What information must be disclosed?

Where a trust is required to file a tax return, the identity of all the trustees (who is on title or holds the asset), beneficiaries (who really owns the asset), settlors (who owned the asset originally) and anyone with the ability to exert influence over trustee decisions regarding the income or capital of the trust must be disclosed.

Such required information includes:

name;
address;
date of birth (if applicable);
country of residence; and
tax identification number (e.g. social insurance number, business number, trust number).

Obtaining this information proactively is especially helpful, particularly if those involved are no longer in close contact.

Failing to File… So what?

Failure to make the required filings and disclosures on time attracts penalties of $25/day, to a maximum of $2,500, as well as further penalties on any unpaid taxes. New gross negligence penalties may also apply, being the greater of $2,500 and 5% of the highest total fair market value of the trust’s property at any time in the year. These will apply to any person or partnership subject to the new regime.

In addition to penalties, failing to properly file trust returns may result in negative tax (such as possibly losing access to the principal residence exemption) and non-tax (such as inadvertently exposing assets to creditors inappropriately) consequences.

We can help you review your ownership arrangements, assess whether the updated bare trust reporting requirements apply to your circumstances, and determine whether you have any T3 Return or Schedule 15 filing obligations. Please contact us for more details.

This information is for educational purposes only. As it is impossible to include all situations, circumstances and exceptions in a summary such as this, a further review should be done by a qualified professional. No individual or organization involved in either the preparation or distribution of this document accepts any contractual, tortuous, or any other form of liability for its contents or for any consequences arising from its use.

Bare Trust Reporting : It’s Here!