The federal government has finalized revised reporting rules for bare trusts. The new rules are significantly narrower than those originally introduced, but certain bare trust arrangements will still have a filing obligation beginning with the 2026 taxation year.
No filings for prior years
Bare trusts are generally not required to file a T3 Trust Income Tax and Information Return or Schedule 15 for the 2023, 2024 or 2025 taxation years, unless specifically requested to do so by the Canada Revenue Agency.
New rules beginning in 2026
Beginning with the 2026 taxation year, certain arrangements where one person holds legal title to property for the use or benefit of another person may be required to file a T3 return and Schedule 15. For most calendar-year arrangements, the first filing deadline will be March 31, 2027.
Listed trusts and other exemptions
The legislation expressly excludes a number of trusts from the enhanced beneficial ownership reporting rules. These “listed trusts” include:
- trusts that have been in existence for less than three months at the end of the year;
- trusts that hold no more than $50,000 of property throughout the year;
- certain family trusts where the value of the trust property does not exceed $250,000 throughout the year, each trustee is an individual, each beneficiary is an individual related to each trustee, and the trust holds only permitted property;
- graduated rate estates;
- qualified disability trusts;
- registered charities;
- mutual fund trusts and certain other regulated or registered trusts.
For the $250,000 family-trust exemption, permitted property includes cash, certain GICs issued by Canadian financial institutions, certain publicly traded investments and certain personal-use property.
A listed trust is excluded from the enhanced beneficial ownership reporting regime and therefore is not required to file Schedule 15 solely because of those rules. It may nevertheless have a T3 filing obligation under the ordinary rules if, for example, it has tax payable, realizes a taxable capital gain, disposes of capital property or makes certain distributions.
Joint ownership arrangements
The revised bare trust rules also specifically exclude a number of common joint-ownership arrangements.
In particular, the bare trust deeming rule does not apply where every person who has the use or benefit of the property is also a legal owner of the property, and there is no legal owner who does not also have a beneficial interest.
This is intended to exclude ordinary joint ownership arrangements such as a joint bank or investment account held by family members where all of the registered owners are also beneficial owners of the account. There are also specific exemptions for certain principal residence arrangements. For example, the rules generally do not apply where related individuals are on title to a property and the property would qualify as the principal residence of one or more of the legal owners. This is intended to address common arrangements such as a parent being added to title to assist a child in obtaining mortgage financing.
Similarly, the rules generally exclude a home held by one spouse or common-law partner for the use or benefit of the other spouse or partner where the property would otherwise qualify as the legal owner’s principal residence.
The rules also contain an exclusion for certain property held by a general partner for a partnership.
Arrangements that may still be reportable
Despite these exemptions, some commercial arrangements may remain subject to reporting. Examples may include:
- nominee corporations holding legal title to real estate for another person or entity;
- bare trustees holding property for joint ventures or co-ownership arrangements;
- assets registered in the name of one person where the beneficial owner is someone else and the joint-ownership exemption does not apply; and
- other nominee arrangements involving a separation between legal and beneficial ownership.
Whether a particular arrangement is reportable will depend on its specific facts and whether one of the statutory exemptions applies.
What should you do now?
If you have an arrangement where the registered or legal owner of property is different from its beneficial owner, we recommend reviewing the arrangement before year-end to determine whether a 2026 filing will be required.
Please contact us if you would like us to review any existing nominee, bare trust or similar ownership arrangements.
This publication is intended for general information purposes only and should not be relied upon as legal advice.
