On March 28, 2024, the Canada Revenue Agency (CRA) made an announcement that had significant implications for bare trust reporting requirements. For the 2023 tax year, bare trusts will no longer be required to file a T3 Income Tax and Information Return, including Schedule 15 (Beneficial Ownership Information of a Trust) — unless the CRA specifically requests these filings.
The trust reporting rules that are in effect for trusts with a taxation year ending on or after December 31, 2023 impose an onerous responsibility on trustees, particularly in situations where a trust has not previously filed a T3 return. They must now meticulously collect personal information from various parties. Trustees are required to report details for each trustee, settlor, beneficiary, and controlling person on the new Schedule 15 before the April 2, 2024 filing deadline. In cases where beneficial ownership is distinct from legal ownership, a thorough analysis is crucial in understanding whether it qualifies as a bare trust arrangement. Trustees must grasp their reporting requirements and review trust documents to confirm and collect information where it is not readily accessible.
In what situations did Bare Trusts previously have to file?
- Parents or grandparents who hold investment assets in trust for their children or grandchildren
- Nominee companies that hold legal title to real estate on behalf of beneficial owners
- Children who are listed as legal owner for assets and properties for aging parents for probate planning
- Lawyers who hold trust accounts for specific clients
- Any other scenario where the person listed as the legal owner differs from the beneficial owner
This change does not affect the requirement for other types of trusts to file T3 returns and Schedule 15.
Over the next few months, the CRA will collaborate with the Department of Finance to provide additional guidance on this filing requirement. As more information becomes available, the CRA will keep Canadians informed.
With the timing of this announcement being challenging due to the significant amount of work put into the filings that have already been prepared and filed, it is important to understand the implications of these untimely changes to bare trust reporting requirements.
To understand how these changes will impact your personal and business affairs, schedule a consultation with a Crowe Soberman Advisor.
This article has been prepared for the general information of our clients. Please note that this publication should not be considered a substitute for personalized advice related to your situation.
