Canadians with simple trust arrangements, known as bare trusts, will once again be spared from filing additional tax paperwork this year, as the federal government weighs changes to the reporting rules that could take effect in 2027.
The Canada Revenue Agency announced Tuesday it will not require bare trust holders to file T3 trust returns for the upcoming tax season. The decision marks a second pause after the agency halted enforcement midway through the turbulent 2024 filing season, when many Canadians were caught off guard by the new requirements.
Ottawa introduced expanded trust reporting rules in 2022, originally slated to apply to the 2023 tax year. The measures were designed to combat money laundering, terrorist financing and tax avoidance. However, the changes swept in thousands of Canadians involved in simple arrangements — such as parents co-signing a child’s mortgage or being added to a bank account — forcing them to complete complex trust filings.
Just days before the 2024 deadline, the CRA abruptly paused enforcement, citing “unintended impacts on Canadians.” Despite that reversal, more than 44,000 taxpayers still filed bare trust forms, with some paying accountants to complete the paperwork.
A bare trust exists when one person holds legal title to an asset on behalf of another, without any beneficial ownership. Unlike formal trusts established with legal advice, these arrangements often arise informally through everyday financial decisions.
Over the summer, the Finance Department proposed amendments to clarify and narrow the rules, carving out exemptions for common and low-risk situations. Those changes are now contained in Bill C-15, the federal budget implementation legislation set to be studied when Parliament resumes in the new year.
While the bill is under consideration, the CRA says it will continue to suspend enforcement. However, the agency signaled that revised requirements are expected to apply to taxation years ending on or after Dec. 31, 2026 — meaning filings could resume in 2027.
Proposed exemptions under the legislation would exclude certain bare trusts from reporting, including those with assets under $50,000, true joint ownership arrangements between spouses, parents listed on a child’s principal residence solely to co-sign a mortgage, and some shared bank accounts involving elderly parents and adult children, provided account values stay below specified thresholds.
Ryan Minor, a director at Chartered Professional Accountants of Canada, said the additional lead time should help taxpayers and professionals prepare — if the rules are communicated clearly.
“That gives us just over a year to get ready,” he said. “The key will be clear guidance on who needs to file and who doesn’t.”
The CRA has faced sharp criticism over its handling of the original rollout. Canada’s Taxpayers’ Ombudsperson, François Boileau, said the agency failed to provide timely and clear information, leading to widespread confusion and unnecessary work.
Accountants warn that without explicit direction, uncertainty could resurface. While bare trust filings do not trigger additional taxes, penalties for failing to file can be significant.
Bill C-15 must still pass both the House of Commons and the Senate before becoming law. Until then, the CRA says Canadians holding simple bare trusts can once again set aside the extra paperwork — at least for now.
