Published: April 16, 2024
Last Updated: October 16, 2026
In March 2024 the Canada Revenue Agency announced, days before the deadline, that bare trusts would not have to file a T3 return for 2023. That announcement was the beginning of a sequence rather than the end of one, and the rules have since been repealed, replaced, and brought back in a different form.
Anyone relying on what they were told in 2024 is now relying on a position that no longer exists. This article traces what actually happened across the four taxation years, and sets out who must file for 2026.
For the substantive law on what a bare trust is, how it is taxed and how to prove one exists, see our guide to bare trusts and their tax consequences.
Key Issues and Findings
The sequence, year by year
- 2023: Bill C-32, passed in December 2022, required the trustee of a bare trust to file an annual T3 return starting with the 2023 taxation year, with Schedule 15 beneficial ownership disclosure. On March 28, 2024, days before the April 2 deadline, the CRA announced it would not require bare trusts to file for 2023 unless it made a direct request. The CRA attributed the decision to the unintended impact the requirement had on Canadians.
- 2024 and 2025. No bare trust filings are required for either year. This is not a further administrative exemption. The original bare trust rule was repealed retroactively, which places bare trusts outside the regime entirely for those two years rather than relieving them from a subsisting obligation.
- 2026 onward. A new deemed trust reporting obligation applies. Certain bare trusts must file a T3 Trust Income Tax and Information Return, including Schedule 15, for taxation years ending on or after December 31, 2026. Because a bare trust is required to have a calendar year-end, the first returns fall due in the spring of 2027.
- The practical consequence is that the obligation now arises under a different provision from the one that caused the 2024 confusion, and advice given in 2024 about whether a particular arrangement was caught does not carry forward.
Why the retroactive repeal matters
The distinction between administrative relief and retroactive repeal is not academic. Relief leaves the obligation intact and forgives the failure to meet it. Repeal removes the obligation.
A taxpayer who did not file for 2024 or 2025 has not failed to do anything, has no exposure to the late filing penalties under the trust reporting rules for those years, and has nothing to remedy. That is a materially better position than the one the 2024 announcement described, and it is worth stating plainly to clients who have been carrying the matter as an open item.
What Schedule 15 requires
The disclosure is substantive rather than formal. Schedule 15 calls for the name, address, date of birth, jurisdiction of tax residence and taxpayer identification number of every trustee, beneficiary and settlor, and of any person able to exert influence over trustee decisions on the appointment of income or capital.
For arrangements that were never documented, that last category is frequently the difficulty. Identifying who can influence the appointment of income or capital requires a view of the arrangement that many informal bare trusts have never had taken.
The arrangements most often caught, and most often missed
Bare trusts are common and are frequently not recognized as trusts at all by the people who created them. Typical arrangements include a parent on title to a child’s home to assist with financing, a child added to a parent’s bank account or property for estate planning purposes, a corporation holding title to real property for its shareholders, a nominee corporation in a commercial real estate structure, and property held by one family member for another without any written instrument.
None of these feels like a trust to the parties. All of them can be one.
Establishing whether a bare trust exists
A bare trust is a trust in which the trustee has no obligation other than to deal with the trust property as the beneficiary directs. It is in substance an agency relationship: the bare trustee holds legal title as the beneficiary’s agent, and the beneficiary retains the rights associated with beneficial ownership.
Like any express trust, it requires the three certainties of intention, subject matter and object. Because the relationship is one of agency, the agency indicia also apply: both parties must consent, the principal must have given the agent authority to affect the principal’s legal position, and the principal must retain control over the agent’s actions.
No written instrument is required. A bare trust arises on the facts, from the separation of legal and beneficial ownership, and exists whether or not anyone has documented it. Where nothing was written, the parties’ conduct determines the question, and the central inquiry is the degree of control the beneficiary exerts. Does the purported bare trustee deal with the property without the beneficiary’s direction? Does the purported bare trustee take any personal benefit from it?
Documenting an arrangement that already exists
Because no instrument is required to create the relationship, a written declaration of bare trust does not create anything. It records what is already there, and its value is evidentiary. The CRA will frequently dispute the existence of a bare trust where there is nothing in writing, which is reason enough to document one.
The question clients then ask is whether it is proper to sign a document now for an arrangement that began years ago. It is. A declaration executed today, bearing its true execution date and expressed to be made as of the date the arrangement actually began, is ordinary conveyancing practice. The recital accurately records when the relationship arose, and the CRA accepts documents in that form.
Two things are different and should not be confused with it. A document signed now but presented as having been signed years ago misrepresents its own provenance. And an honestly dated document whose recital asserts a state of affairs that did not exist on the earlier date uses a legitimate drafting form to manufacture a history. The test is not when the document was written. It is whether everything it says, including about its own date and about when the relationship arose, is true.
“The filing obligation changed three times in three years, and each change moved in a different direction. The clients most exposed are not the ones who got it wrong. They are the ones who got advice in 2024, acted on it correctly at the time, and have heard nothing since.”
David J. Rotfleisch, Certified Specialist in Taxation Law (Law Society of Ontario)
Implications for Canadian Taxpayers
The point to take from the sequence is that an arrangement reviewed in 2024 needs reviewing again. The 2026 obligation arises under a different provision, the exemptions have been reworked more than once, and an arrangement that fell outside the original rule may be caught by the new one.
Review should begin well before the year end rather than after it. Identifying whether a bare trust exists is a legal question requiring analysis of the arrangement against the trust and agency principles described above, and where one is found, assembling the Schedule 15 information for an undocumented arrangement takes time. Obtaining a trust account number, where none exists, is itself a step with a lead time.
Takeaway
No bare trust filings were required for 2023, 2024 or 2025. The 2023 position was administrative relief; the 2024 and 2025 position is that the original rule was repealed retroactively, so there was no obligation at all.
A new reporting obligation takes effect for taxation years ending on or after December 31, 2026, with the first returns due in spring 2027. Arrangements assessed under the old rule should be reassessed under the new one, and the work of identifying and documenting a bare trust is better done before the year end than after it.
Pro Tax Tips
- Treat any 2024 advice on this subject as spent. It was correct when given and it does not describe the current obligation. The clients most at risk are those who received accurate advice two years ago and have heard nothing since, because nothing about their file looks like a problem.
- Identify the arrangements nobody thinks of as trusts. A parent on title to a child’s home, a child added to a parent’s account, a nominee corporation holding real property, or property held informally for a family member are all candidates. The parties’ own characterization is not the test.
- Document existing arrangements in writing, and do it before the filing obligation bites rather than in response to a CRA enquiry. A declaration of bare trust executed now, dated as of the date the arrangement began, is the ordinary and proper way to record a relationship that already exists.
- Start the Schedule 15 information early. The disclosure extends to anyone able to influence the appointment of income or capital, which on an undocumented family arrangement is frequently the hardest element to pin down.
- Confirm the tax result before relying on a bare trust, because the usual treatment is not universal. In The Queen v. Cheema, 2018 FCA 45, the Federal Court of Appeal held that a new home purchaser cannot claim the GST/HST New Housing Rebate where a co-signer of the purchase agreement does not occupy the home, even where the co-signer acted as a bare trustee.
- Where an arrangement is unclear, have it reviewed by a Canadian tax lawyer rather than assuming it falls outside the rules. Whether an arrangement is a bare trust depends on the specific facts and the applicable law, which is the CRA’s own position on the question.
Frequently Asked Questions
Did bare trusts have to file for 2023?
No, unless the CRA made a direct request. On March 28, 2024 the CRA announced it would not require bare trusts to file a T3 return, including Schedule 15, for the 2023 tax year.
What about 2024 and 2025?
No filings were required for either year, and for a different reason. The original bare trust rule was repealed retroactively, so bare trusts were outside the regime entirely rather than relieved from an existing obligation.
Does that mean I am exposed to penalties for not filing in 2024 or 2025?
No. There was no obligation to fail. Retroactive repeal is not the same as forgiveness of a breach.
When does the new obligation start?
Certain bare trusts must file a T3 return with Schedule 15 for taxation years ending on or after December 31, 2026. Because a bare trust must have a calendar year-end, the first returns are due in spring 2027.
I was told in 2024 that my arrangement was not caught. Does that still apply?
Not necessarily. The 2026 obligation arises under a different provision and the exemptions have been reworked. An arrangement assessed under the old rule should be assessed again under the new one.
What does Schedule 15 ask for?
The name, address, date of birth, jurisdiction of tax residence and taxpayer identification number of every trustee, beneficiary and settlor, and of any person able to exert influence over trustee decisions on the appointment of income or capital.
Do I need a written agreement to have a bare trust?
No. A bare trust arises on the facts, from the separation of legal and beneficial ownership, and exists whether or not anyone documented it. Where nothing is written, the parties’ conduct determines the question.
Then why document it?
Because the CRA will frequently dispute the existence of a bare trust where there is nothing in writing. A written declaration is evidence of a relationship that already exists, not the source of it.
Can I sign a bare trust declaration now for an arrangement that started years ago?
Yes. A declaration executed today, bearing its true execution date and expressed to be made as of the date the arrangement began, is ordinary practice and is accepted. What is improper is a false execution date, or an honest date attached to a recital asserting something that was not true on the earlier date.
What kinds of arrangements are usually bare trusts?
A parent on title to a child’s home to assist with financing, a child added to a parent’s account or property for estate planning, a corporation holding title for its shareholders, a nominee corporation in a commercial real estate structure, and property held informally by one family member for another.
Is a bare trust always ignored for tax purposes?
No. Subsection 104(1) of the Income Tax Act deems a bare trust not to be a trust for income tax purposes, and the GST/HST treatment generally follows. But the treatment is not universal: see The Queen v. Cheema, 2018 FCA 45 on the New Housing Rebate.
How do I know whether my arrangement qualifies?
It requires legal analysis of the arrangement against the trust and agency principles. The CRA’s own position is that whether an arrangement is a trust or a bare trust depends on the specific facts of each situation and the applicable law, and that taxpayers unsure of their position may wish to seek legal counsel.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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