Bare Trust Reporting: CRA's New T3 Requirements and Who Is Affected

Key takeaways

• Most trusts, including bare trusts, must file a T3 Trust Income Tax and Information Return for the 2024 tax year
• New Schedule 15 requires disclosure of all trustees, beneficiaries, settlors, and controlling persons
• Bare trusts where a bank account or property is held in one person's name for another are included
• The CRA waived the requirement for 2023 after confusion about scope — the waiver expired December 31, 2023
• Failure to file penalties are $25/day up to $2,500, plus potential gross negligence penalties

The CRA's new T3 trust reporting rules, which came into force for the 2023 tax year but were immediately waived due to implementation confusion, apply in full for the 2024 tax year. If you hold property in trust for another person — even informally — you may need to file a T3 return for the first time.

What changed

Before 2023, most trusts that had no income and made no distributions were not required to file T3 returns. The new rules remove this exemption for almost all express trusts and bare trusts. Even a trust that has had zero activity in the year must now file and disclose the identity of all relevant parties.

The new Schedule 15 (Beneficial Ownership Information of a Trust) requires the name, address, date of birth, country of residence, and tax identification number of every trustee, beneficiary, settlor, and controlling person of the trust. This is the CRA's response to concerns about the use of trusts to obscure beneficial ownership in the context of tax avoidance and money laundering.

What counts as a bare trust

A bare trust is a trust where the trustee has no independent powers or responsibilities — they hold the property purely as a nominee for the beneficial owner. Common examples the CRA has specifically identified include:

• A parent's name on a bank account or investment account for an adult child (or vice versa)
• A joint bank account held by spouses where only one is the beneficial owner
• A property title held in a corporation's name for a shareholder
• A nominee corporation holding real property on behalf of the actual owners
• An in-trust account opened at a brokerage for a minor child

If the person whose name is on the account or title does not have beneficial ownership, there is likely a bare trust requiring a T3 filing.

Who must file

The trustee must file the T3 return. The due date is 90 days after the trust's year-end (December 31 for most trusts), making the 2024 T3 due March 31, 2025. This deadline is separate from and earlier than the personal T1 filing deadline.

Certain trusts are excluded: graduated rate estates (GREs) for the first 36 months after death, qualified disability trusts, trusts holding real property with a value under $50,000 if certain other conditions are met, and trusts that have been in existence for less than three months at the end of the year. The in-trust accounts exemption requires that all property in the trust is held exclusively in Canadian deposits or publicly listed securities and has a total value under $50,000 — a narrow carve-out.

Penalties for non-compliance

The late filing penalty for a T3 return is $25 per day, to a maximum of $2,500. If the failure to file is found to be willful or grossly negligent, additional penalties of 5% of the maximum fair market value of the trust property during the year can be assessed — with a minimum penalty of $2,500.

For a bare trust holding a $1 million property, gross negligence penalties could reach $50,000. The CRA has indicated it will prioritize education over penalties in the initial years, but this guidance is administrative and not binding.

What to do

Review any situations where you or your family hold assets in another person's name, or another person holds assets in your name. Consult a CPA or tax lawyer about whether a T3 filing is required. Even if the trust has no income, the information return and Schedule 15 must be filed. The cost of professional help to file is far less than the potential penalties for non-compliance.