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ARTICLE · 27 MARCH 2024

CRA's New Trust Reporting Requirements And The Impact On Bare Trusts

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The CRA has introduced new trust reporting requirements that apply to all express trusts (with a few exceptions) with taxation years ending after December 30, 2023.

CanadaFamily and Matrimonial
Hilary A. Leitch
Hilary A. Leitch
Greg Woodward
Greg Woodward
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The CRA has introduced new trust reporting requirements that apply to all express trusts (with a few exceptions) with taxation years ending after December 30, 2023. Express trusts are those created with express written or verbal intent by the Settlor – the person creating the Trust.

A major change with the new reporting requirement is the requirement to file an annual T3 trust income tax return for a bare trust. Prior to the 2023 taxation year, bare trusts were generally excluded from any filing requirement.

WHAT IS A BARE TRUST?

A bare trust is a type of trust in which one person's name is shown as the legal owner of an asset (the trustee), but the beneficial owner of the asset belongs to someone else (the beneficiary). With a bare trust arrangement, the trustee has no discretion over the asset and must follow the directions of the beneficiary. Any income, profits and/or gains realized on the trust property are taxed in the beneficiary's hands.

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