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Have you co-signed a parent or child’s mortgage? Is your name on a parent’s,
child’s or other person’s bank account? Has a single relative or friend added
you to the title of their home, just in case something happens to them?
If so, you have entered into a bare trust agreement, a somewhat complex tax
relationship, unknowingly and it has the potential to cost you, thanks to the
new rules CRA has imposed for all trust year ends after December 31/23.

According to the Income Tax Act (Canada), a “bare trust” is a relationship
where a trustee “can reasonably be considered to act as an agent for all the
beneficiaries under the trust with respect to all dealings with the trust

In general, a bare trust is a way of holding property by having 1 person or
group listed on official or legal documents with a completely different person
or group able to enjoy all the benefits & risks of ownership. The
trustee(s) can reasonably be considered to act for the beneficiaries if they
have no responsibilities or significant powers.  The trustee(s) can take
no action without instructions from the beneficiaries as their only function is
to hold the title.

It sounds fairly straight forward for legal speak, so what is all the fuss?
Prior to Bill C-32’s new trust reporting rules, many trusts had zero tax filing
requirements. The existing Income Tax Act (Canada) rules made it clear that
bare trusts are not considered trusts for the purposes of the act &,
therefore are ignored when determining income tax issues. After the initial
draft, the Department of Finance issued draft legislation to “clarify” that it
wanted “bare trusts” to be subject to the new rules as the original proposed
changes made it clear they were exempt.

The Government of Canada has imposed mandatory tax filings on trusts,
additionally requiring expanded information on the settlor(s), trustee(s) &
beneficiaries of the trust.   The returns must be filed within the
first 90 days of the year.  If the due date falls on a weekend, it rolls
forward to the next business day, Tuesday April 2nd  in 2024.
(Do you think it’s ironic that April fool’s day is a federal holiday this year)

Under the new rules, late or not filing are subject to a gross negligence
penalty equal to the greater of $2,500 or 5% of the
highest fair market value, at any time during the year, of the property held in
the trust.   Have you done the math on a $500,000 mortgage.  Are
you starting to understand the title I chose?

Prior to the new legislation, many people had no idea they’d entered into a
trust relationship. Bare trusts are often formed without any fancy forms or
paperwork, but all fall under the new filing requirements. Unfortunately, trust
returns aren’t as straight forward as a regular personal income tax
return.  If you would like information on what information is required,
applying for a trust account number and filing costs, please contact us.

The above information was current as of March 12/24, per the last modified
date on, (New reporting requirements for trusts for tax years ending
after Dec30/23)

We have received an update on this – if the total value in all the accounts in the trust at no time in the year us more than $50,000 you do not have to file. In layman’s terms – If you have your name on your mom’s bank accounts with her, and there are 3 accounts that you are both listed on. If there is $25,000 in each of those accounts, totalling $75.000, then you have to file a trust return. If there was only a $10,000 in each account, totalling $30,000m then you do not have to file. CRA is making changes and updating this almost daily at this point. We will try our best to keep you updated.