In a bare trust arrangement, the legal title holder is separate from the beneficial owner.

The Canada Revenue Agency defines a bare trust arrangement as “an arrangement under which [the trustee] can reasonably be considered to act as agent for all the beneficiaries under the trust with respect to all dealings with all of the trust’s property.” This is a very broad definition and can encompass many different arrangements.

Examples include (but are not limited to):

  • Property held by a nominee company,
  • Property which someone is on legal title for the purpose of estate planning,
  • and in-trust-for accounts.

Common scenarios include:

  • Adding adult children to legal title on a property while the parents retain beneficial ownership
  • Adding adult children as joint legal owners (but not beneficial owners) for investment or cash accounts for estate planning purposes.

Note, there is an exemption to filing for Trusts that own less than $50,000 throughout the taxation year of cash, government bonds, or listed securities.

Bare Trust Tax Filing and Deadline

The T3 Trust Income Tax and Information Return and all relevant schedules are due for filing no later than 90 days after December 31, 2023.

For 2023 T3 returns with calendar year-ends, this will be a filing deadline of April 1, 2024.

The penalty for failing to file a T3 return on time is $25 per each day late, (with a minimum penalty of $100) and a maximum penalty of $2,500. Obviously, you’ll want to avoid those penalties!

We encourage you to contact our office if you believe a bare trust arrangement exists and if you’d like assistance in filing the T3 return or have any related questions.

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