Bare Trust Reporting Requirements

The Department of Finance announced additional reporting requirements in the 2018 Federal Budget, requiring some trusts to provide additional information on an annual basis as part of their tax filings.

In August of 2022, the Department of Finance released further draft legislation with respect to the new trust reporting rules. These rules will apply to Bare Trusts.

A bare trust exists where a person, the trustee, has been given legal title to the property and has no other duty to perform or responsibilities to carry out as trustee, in relation to the property given in the trust. The sole duty of a bare trustee is to convey legal title to the trust property on demand and according to the instructions of the beneficiary as provided for within the trust document. The bare trustee does not have any independent power, discretion, or responsibility pertaining to the trust property.

The trustee in a bare trust situation may be a nominee corporation. It is quite common in many real estate developments for a nominee corporation to hold title to the property in a bare trust arrangement. Both bare trust corporations and individual trustees are required to file a T3 trust return providing information as required by the legislation.

Under the legislation, trusts are required to file a T3 for years ending after December 30, 2022. Since these trusts are deemed to have a calendar year-end for T3 reporting, they will have to file a 2022 T3. The T3 is due 90 days after the year-end or March 31, 2023.

The information must be reported annually on each trustee, beneficiary, and settlor of the trust. The bare trust is required to report the following information for each individual:

Date of birth
Jurisdiction of residence
Taxpayer identification number
A beneficial ownership schedule

The rules don’t apply to new trusts (less than 3 months) or trusts with assets of $50k or less.

The penalties for late filing and failure to file are equal to $25 for each day it fails to file, with a minimum penalty of $100 and a maximum penalty of $2,500.