Bare Trusts To Begin Filing Tax Returns (…But Don't Panic As There Is Time)

For tax years ending on or after December 31, 2023, most bare trusts will be required to file a T3 trust income tax return, regardless of the absence of any income to report, and may also be required to disclose information about the beneficiaries of the bare trust (referred to as a Schedule 15 disclosure).

A "bare trust" is not technically a legal term but is a commonly used phrase to describe a form of trust relationship where the trustee merely holds legal title to property on behalf of one or more beneficiaries but has no discretion over such assets and must follow the instructions of the beneficial owners of the property. Bare trusts can exist without a written trust indenture. A principal-agent relationship, without reference to any particular property, would typically not constitute a bare trust.