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Barely Time to Spare

Barely Time to Spare – Bare Trust Reporting Requirements for 2023 Fiscal Year

With just 5 days to go until the April 2nd filing deadline, the Canada Revenue Agency (CRA) has announced that Canadians with bare trusts won’t have to follow the recently announced updates to the trust reporting scheme.

What is a Bare Trust?

For income tax purposes, a bare trust is an informal trust arrangement in which the trustee can reasonably be considered to act as an agent for the beneficiaries of the trust with respect to the trust’s property.

Wait, What’s Changed?

Legislation enacted in December 2022 requires trusts to comply with more thorough reporting requirements in all tax returns for taxation years ending after December 30, 2023. The new rules significantly limit the number of trusts exempted from filing a T3 return. The goal of the legislative amendments was to increase transparency when it comes to beneficial ownership and assist the CRA in assessing the tax liabilities for trusts and their respective beneficiaries.

Prior to the legislative changes, bare trusts had never before been required to submit T3 returns. As bare trusts are informal arrangements that are often not documented in writing, stakeholders argued that the changes to the trust reporting requirements were particularly different for bare trusts to comply with.

The Latest

On March 28th, after significant criticism from stakeholders, the CRA announced that for the 2023 taxation year bare trusts would not have to follow the new enhanced reporting requirements for trusts.

gbtlaw will continue to monitor these developments. Should you have any questions, please contact one of our business law professionals.


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