Better late than never (maybe!)
Today, March 28, 2024, the Canada Revenue Agency announced that they will not require bare trusts to file the T3 Trust Income Tax and Information Return for the 2023 taxation year. The filing deadline for these returns was April 2, 2024 (bumped from March 30, 2024 because of the weekend and holiday).
Until the 2023 taxation year, bare trusts were not required to file T3 returns. That changed with the introduction of the beneficial ownership information reporting rules. These rules require most trusts to file a T3 return even if there is no tax owing so that the government can receive Schedule 15 Beneficial Ownership Information of a Trust. This schedule requires name, address, date of birth, and social insurance number for any person or entity that is a settlor, trustee, beneficiary, or controlling person of a trust. For the purposes of this filing requirement, bare trusts were now included (until today’s announcement).
Bare trusts exist in numerous forms for various legitimate purposes. For example, for estate planning purposes, an individual may add his or her children to the legal title of his or her residence while retaining 100% of the beneficial ownership of the residence. The children hold title in a bare trust for the benefit of the parent. This allows the residence to pass to the children on the parent’s death without being subject to probate. These arrangements (plus many other forms of bare trusts) were caught under the beneficial ownership information reporting rules.
The good news of today’s announcement is that bare trusts don’t have to file T3 returns for 2023. The bad news is that by waiting until a few short days before the filing deadline, the government has not spared us much–since much of the work to gather all the information and prepare these returns was already done or well on the way to being done.
Let’s focus on the good news!
(You can read Canada Revenue Agency’s announcement here.)