Bare Trust Rules Canada 2026 | Reporting Requirements
Updated
Canada’s bare trust reporting rules, effective for the 2024 tax year and beyond, caught millions of Canadians off guard. If you hold property on behalf of someone else — a parent on a child’s mortgage, a child on a parent’s bank account for convenience, a numbered company holding real estate — you likely have a bare trust and must file a T3 return annually or face penalties up to $25,000. The gross negligence penalty alone is 5% of the highest fair market value of the property held, making this one of the most consequential tax filing requirements CRA has introduced in years.
What Is a Bare Trust?
Definition
Element
Description
Trustee
Holds legal title
Beneficiary
Has beneficial ownership
Trustee duties
Minimal - act as directed
Trustee discretion
None
Also called
Nominee arrangement
Common Examples
Situation
Bare Trust?
Parent holds property for adult child
✅ Yes
Holding company for real estate
✅ Often yes
Broker nominee account
✅ Yes
Joint bank account (some)
⚠️ Maybe
Mortgage conveniences
✅ Often yes
Informal trust for minor
❌ Usually not
New Filing Requirements
What Changed
Before 2024
2024+
No T3 filing if no income
Must file annual T3
Little CRA visibility
Full reporting required
No penalties
Penalties apply
Who Must File
Must File
Exempt
Most bare trusts
Assets under $50,000 all year
In existence less than 3 months at year end
Certain lawyer trust accounts
Personal-use property trusts
RRSP/RRIF/TFSA (already reporting)
Filing Requirements
What to Report
Information
Required
Trust identification
Name, address
Trustees
Names, addresses, DOB
Beneficiaries
Names, addresses, DOB
Settlors
Names, addresses, DOB
Property held
Description, FMV
Deadline
Due Date
Details
90 days after year end
March 31 for Dec 31 year end
First return
2024 tax year
Exemptions
Key Exemptions
Exemption
Details
Under $50,000
Assets FMV under $50K all year
Less than 3 months
Existed <3 months at year end
Lawyer trust accounts
Client trust accounts
Certain registered accounts
RRSP, TFSA, RESP, etc.
Mutual fund trusts
Already filing
Principal residence
Some situations
$50,000 Threshold
Calculation
Rule
Test
FMV at any point in year
If exceeded ever
Must file
If always under
Exempt
Common Situations
Parent Holding Property for Child
Situation
Details
Parent on title
For financing purposes
Child is real owner
Paid for property
Bare trust exists
Must file T3
Adult Child Holding for Parent
Situation
Details
Child on title
For probate avoidance
Parent is real owner
Beneficial owner
Bare trust exists
Must file T3
Joint Bank Accounts
Type
Bare Trust?
Spouse joint account
Usually no (true joint)
Parent-child “convenience”
Often yes
Business partner
Depends on arrangement
Real Estate Nominee
Situation
Filing?
Numbered company holds real estate
Yes
Individual is beneficial owner
T3 required
Penalties
Late Filing
Penalty
Amount
Base
$25 per day late
Minimum
$100
Maximum
$2,500
Gross Negligence
Penalty
Amount
Rate
5% of highest FMV
Minimum
$2,500
Maximum
$25,000
Example Penalties
Property Value
Late (max)
Gross Negligence
$100,000
$2,500
$5,000
$500,000
$2,500
$25,000
$1,000,000
$2,500
$25,000 (max)
How to File
T3 Trust Return
Step
Action
1
Obtain T3 package
2
Complete Schedule 15
3
Provide required information
4
File by deadline
Schedule 15
Information
Required for
Trustees
All of them
Beneficiaries
All with interests
Settlors
Who created trust
Property
Description and value
Can File Electronically?
Method
Available
Paper
Yes
Electronic (EFILE)
Yes (with software)
Representative
Can file on behalf
What If You Didn’t Know?
Voluntary Disclosure
Option
Details
VDP application
May reduce penalties
Requirements
Before enforcement contact
Benefit
Possible penalty relief
CRA’s Position
Factor
Consideration
Good faith
May help
Never intended trust
Document arrangement
Seek professional advice
Get proper guidance
Avoiding Bare Trust Issues
Documentation Tips
Tip
Why
Written agreements
Clarify ownership
Document contributions
Who paid for what
Keep records
Transactions, decisions
Review arrangements
May need restructuring
Alternative Structures
Instead Of
Consider
Bare trust
Joint tenancy (real joint ownership)
Parent on title
Proper mortgage arrangements
Holding companies
Still may be bare trust
Nothing
Sometimes filing is simplest
Professional Advice Recommended
When to Get Help
Situation
Why
Real estate arrangements
Determine if bare trust exists
Parent-child property
Complex rules
Business structures
Corporate arrangements
Uncertainty
Penalties are significant
Who Can Help
Professional
Service
Tax accountant
Filing and compliance
Tax lawyer
Structure advice, disputes
Estate planner
Arrangement review
Summary
Key Takeaways
Point
Details
Filing now required
Most bare trusts
Penalties significant
Don’t ignore
The Bottom Line
If you’re on someone else’s property title, hold a bank account in your name for a family member’s benefit, or use a nominee corporation for real estate, you almost certainly have a bare trust that requires annual T3 filing. The $50,000 exemption threshold is based on fair market value at any point during the year — not book value — so most real estate arrangements exceed it. File by March 31 each year, and if you missed previous years, consider CRA’s Voluntary Disclosure Program before enforcement catches up. The cost of filing ($500–1,000 with an accountant) is trivial compared to potential penalties of $2,500–$25,000.| Exemptions exist | Check if you qualify |
| Get advice | When uncertain |
| Deadline | March 31 for prior year |