Bare trust returns are due for the first time for the 2026 taxation year
Beginning with the 2026 taxation year, the Canada Revenue Agency (CRA) requires bare trusts to file an annual return. These rules can apply to everyday arrangements where one person holds property in their name on someone else’s behalf. Because they apply to family and business arrangements that most people would not think of as a trust, they are worth reviewing before year-end. Returns for the 2026 taxation year are due March 31, 2027.
What is changing
Beginning with the 2026 taxation year, bare trusts must file an annual T3 Trust Income Tax and Information Return, along with Schedule 15. Schedule 15 identifies the trustees, settlors, beneficiaries, and controlling persons of the trust. The CRA has published guidance on the enhanced reporting rules for trusts and bare trusts.
These rules were first announced in 2018 and legislated in 2022. However, the CRA waived the filing requirement for the 2023, 2024, and 2025 taxation years, which makes 2026 the first year in which bare trust returns must actually be filed.
What is a bare trust?
A bare trust generally exists when one person (the legal owner) holds title to property for another person (the beneficial owner). The legal owner has no real decision-making power over the property. The beneficial owner is entitled to the income, capital, and enjoyment of the property, and can require that the property be transferred to them at any time. In effect, the legal owner is simply a nominee.
A bare trust can exist without a written agreement and without anyone intending to create a trust. Many everyday family and business arrangements can meet this definition.
Situations to consider
The following arrangements may create a bare trust, whether they involve you, a family member, or an entity you control:
- A parent, child, or other relative added to the title of a home, cottage, or other real property for mortgage, probate, or convenience reasons
- Real property held by a nominee individual or corporation on behalf of the true owner, a joint venture, a syndicate, or a partnership
- “In trust for” bank or investment accounts (an account held for a minor may be an actual trust rather than a bare trust)
- An adult child added as a joint holder on an elderly parent’s bank account to help pay bills or manage money (a power of attorney alone does not create a bare trust)
- GICs, term deposits, or investment accounts held in one person’s name where the funds belong to someone else
- Shares held by an individual to meet director or governance requirements where the economic rights belong to someone else
- Assets registered in the name of a general partner or another person that belong to a partnership
- A lease held by a nominee (often a corporation) for another entity
- A corporation holding title to vehicles, equipment, or investments for a shareholder or a related company
- A vehicle, boat, or aircraft registered in one person’s name while someone else paid for it, bears the risk, and uses it
- Collectibles or artwork registered in an agent’s or custodian’s name for someone else
- An escrow or holdback arrangement on the sale of a business or real estate
- Any informal or unwritten understanding that a legal owner holds property, in whole or in part, for someone else
Exemptions may apply
Not every bare trust has to file a return. Exemptions include situations where:
- The total fair market value of the property does not exceed $50,000 at any time in the year
- The arrangement has existed for less than three months
- The total fair market value does not exceed $250,000, all legal and beneficial owners are related individuals, and the property consists only of certain assets (for example, it cannot include private company shares, precious metals, commodities, or crypto-assets)
- All of the legal owners are also the beneficial owners (for example, spouses on a joint account)
- Related family members hold title to residential property that qualifies as a principal residence of one or more of the title holders
- One spouse or common-law partner holds title to a principal residence for the use or benefit of the other
- The property is held on behalf of a partnership by one of its partners
- The property is held under a court order
Whether an exemption applies depends on the specific facts and, in some cases, on the value of the property throughout the year. This means an arrangement may be exempt in one year and reportable in the next.
Penalties for not filing
The penalty for failing to file a bare trust return can be as much as $2,500. If the failure is deliberate or due to gross negligence, the penalty can increase to 5% of the fair market value of the property held. Penalties are assessed against the trustees, who are the legal owners of the property.
How RLB can help
Bare trust arrangements are often informal, so it isn’t always obvious whether one exists or whether an exemption applies. We help our clients review their arrangements, assess whether a filing is required, and handle the CRA registration and T3 filing where needed.
Whether a bare trust exists is ultimately a legal question that depends on the facts of each arrangement. In more complex situations, we may recommend that you get advice from your lawyer before a filing decision is made.
If you are an RLB client and think any of the situations above may apply to you, please complete our Bare Trust Self-Assessment and contact your RLB advisor by December 31, 2026. This gives us time to review your situation well before the March 31, 2027 filing deadline.
