What Is a Bare Trust?
Definition
| Element |
Description |
| Trustee |
Holds legal title |
| Beneficiary |
Has beneficial ownership |
| Trustee duties |
Minimal - act as directed |
| Trustee discretion |
None |
| Also called |
Nominee arrangement |
Common Examples
| Situation |
Bare Trust? |
| Parent holds property for adult child |
✅ Yes |
| Holding company for real estate |
✅ Often yes |
| Broker nominee account |
✅ Yes |
| Joint bank account (some) |
⚠️ Maybe |
| Mortgage conveniences |
✅ Often yes |
| Informal trust for minor |
❌ Usually not |
New Filing Requirements
What Changed
| Before 2024 |
2024+ |
| No T3 filing if no income |
Must file annual T3 |
| Little CRA visibility |
Full reporting required |
| No penalties |
Penalties apply |
Who Must File
| Must File |
Exempt |
| Most bare trusts |
Assets under $50,000 all year |
|
In existence less than 3 months at year end |
|
Certain lawyer trust accounts |
|
Personal-use property trusts |
|
RRSP/RRIF/TFSA (already reporting) |
Filing Requirements
What to Report
| Information |
Required |
| Trust identification |
Name, address |
| Trustees |
Names, addresses, DOB |
| Beneficiaries |
Names, addresses, DOB |
| Settlors |
Names, addresses, DOB |
| Property held |
Description, FMV |
Deadline
| Due Date |
Details |
| 90 days after year end |
March 31 for Dec 31 year end |
| First return |
2024 tax year |
Exemptions
Key Exemptions
| Exemption |
Details |
| Under $50,000 |
Assets FMV under $50K all year |
| Less than 3 months |
Existed <3 months at year end |
| Lawyer trust accounts |
Client trust accounts |
| Certain registered accounts |
RRSP, TFSA, RESP, etc. |
| Mutual fund trusts |
Already filing |
| Principal residence |
Some situations |
$50,000 Threshold
| Calculation |
Rule |
| Test |
FMV at any point in year |
| If exceeded ever |
Must file |
| If always under |
Exempt |
Common Situations
Parent Holding Property for Child
| Situation |
Details |
| Parent on title |
For financing purposes |
| Child is real owner |
Paid for property |
| Bare trust exists |
Must file T3 |
Adult Child Holding for Parent
| Situation |
Details |
| Child on title |
For probate avoidance |
| Parent is real owner |
Beneficial owner |
| Bare trust exists |
Must file T3 |
Joint Bank Accounts
| Type |
Bare Trust? |
| Spouse joint account |
Usually no (true joint) |
| Parent-child “convenience” |
Often yes |
| Business partner |
Depends on arrangement |
Real Estate Nominee
| Situation |
Filing? |
| Numbered company holds real estate |
Yes |
| Individual is beneficial owner |
T3 required |
Penalties
Late Filing
| Penalty |
Amount |
| Base |
$25 per day late |
| Minimum |
$100 |
| Maximum |
$2,500 |
Gross Negligence
| Penalty |
Amount |
| Rate |
5% of highest FMV |
| Minimum |
$2,500 |
| Maximum |
$25,000 |
Example Penalties
| Property Value |
Late (max) |
Gross Negligence |
| $100,000 |
$2,500 |
$5,000 |
| $500,000 |
$2,500 |
$25,000 |
| $1,000,000 |
$2,500 |
$25,000 (max) |
How to File
T3 Trust Return
| Step |
Action |
| 1 |
Obtain T3 package |
| 2 |
Complete Schedule 15 |
| 3 |
Provide required information |
| 4 |
File by deadline |
Schedule 15
| Information |
Required for |
| Trustees |
All of them |
| Beneficiaries |
All with interests |
| Settlors |
Who created trust |
| Property |
Description and value |
Can File Electronically?
| Method |
Available |
| Paper |
Yes |
| Electronic (EFILE) |
Yes (with software) |
| Representative |
Can file on behalf |
What If You Didn’t Know?
Voluntary Disclosure
| Option |
Details |
| VDP application |
May reduce penalties |
| Requirements |
Before enforcement contact |
| Benefit |
Possible penalty relief |
CRA’s Position
| Factor |
Consideration |
| Good faith |
May help |
| Never intended trust |
Document arrangement |
| Seek professional advice |
Get proper guidance |
Avoiding Bare Trust Issues
Documentation Tips
| Tip |
Why |
| Written agreements |
Clarify ownership |
| Document contributions |
Who paid for what |
| Keep records |
Transactions, decisions |
| Review arrangements |
May need restructuring |
Alternative Structures
| Instead Of |
Consider |
| Bare trust |
Joint tenancy (real joint ownership) |
| Parent on title |
Proper mortgage arrangements |
| Holding companies |
Still may be bare trust |
| Nothing |
Sometimes filing is simplest |
Professional Advice Recommended
When to Get Help
| Situation |
Why |
| Real estate arrangements |
Determine if bare trust exists |
| Parent-child property |
Complex rules |
| Business structures |
Corporate arrangements |
| Uncertainty |
Penalties are significant |
Who Can Help
| Professional |
Service |
| Tax accountant |
Filing and compliance |
| Tax lawyer |
Structure advice, disputes |
| Estate planner |
Arrangement review |
Summary
Key Takeaways
| Point |
Details |
| Filing now required |
Most bare trusts |
| Penalties significant |
Don’t ignore |
| Exemptions exist |
Check if you qualify |
| Get advice |
When uncertain |
| Deadline |
March 31 for prior year |