CRA Exempts Bare Trusts from Reporting Requirements for 2023 Tax Year

Dean LaBerge,
Local Journalism Initiative Reporter

In a last-minute reversal of the Canada Revenue Agency’s (CRA) inclusion of bare trusts in the newly implemented expanded trust reporting requirements, the CRA has now exempted bare trusts from the requirement to file a T3 Trust Income Tax and Information Return and Schedule 15 Beneficial Ownership Information of a Trust for the 2023 tax year. The CRA can still request bare trust reporting, but it is not required unless directly requested.

The CRA announced this decision on March 28, just five days before the filing deadline of April 2.

A bare trust for income tax purposes is a trust in which a person is listed on the legal title of an asset (property, financial investment or account) but does not hold the asset as a true beneficial owner. Beneficial owners receive the benefits of the asset (earned income, proceeds if the asset is sold, etc.) and are responsible for the costs and/or risks that come with ownership (property taxes, repairs, injury liability, etc.).

This announcement will undoubtedly come as a relief to the many Canadians who are beneficiaries of bare trusts and would have had to file these tax documents for the first time. This decision will also spare the many Canadians who may not have known that they were considered beneficiaries of this type of trust and, therefore, could have unknowingly incurred significant financial penalties and unintended personal income tax repercussions by not filing the required paperwork.

According to the CRA website, the organization exempted bare trusts from the expanded reporting requirements because they “ have had an unintended impact on Canadians, the Canada Revenue Agency (CRA) will not require bare trusts to file a T3 Income Tax and Information Return (T3 return), including Schedule 15 (Beneficial Ownership Information of a Trust), for the 2023 tax year, unless the CRA makes a direct request for these filings.”

The CRA intends to work with the Department of Finance over the coming months to provide additional clarity on these filing requirements. Canadians will be informed about any updates to the reporting requirements as more details become available.

Dean LaBerge,
Local Journalism Initiative Reporter
Grizzly Gazette