After two years of administrative relief, the Canada Revenue Agency (CRA) has officially ended the reporting holiday for bare trusts. For taxation years ending on or after December 31, 2026, the expanded trust reporting rules will take full effect. If you have been relying on the CRA's recent exemptions to avoid filing, it’s time to prepare.
Many Canadians are involved in a bare trust without even realizing it. A bare trust typically exists when a person or corporation holds legal title to an asset (like real estate or a bank account), but another person is the true beneficial owner. While the CRA has finalized some key exemptions, many common arrangements will now require a formal T3 Trust Income Tax and Information Return, along with a Schedule 15.
Here is a breakdown of what the 2026 rules mean for you.
The Good News: Proposed Exemptions The CRA has recognized that some everyday arrangements shouldn't be burdened with complex tax filings. Under the latest guidelines, you likely won't need to file if your arrangement falls into these categories:
-
Joint Spousal Accounts: Standard joint bank accounts or investment accounts held between spouses or common-law partners are generally exempt from the new reporting requirements.
-
Holdings Under $50,000: If the bare trust holds assets with a total fair market value of less than $50,000 throughout the entire year, you may be exempt. However, this only applies to specific types of assets, such as cash, GICs, and publicly traded securities. (Note: Real estate does not qualify for this exemption, regardless of value).
The Reality Check: Arrangements Requiring a T3 and Schedule 15 If your situation doesn't clearly fit into the exemptions, you must report it. Here are two of the most common everyday scenarios that are caught in the reporting net:
-
Non-Spousal Real Estate Co-Signings: Did you co-sign a mortgage to help your child buy their first home in Alberta and go on the title to secure the financing? Even if you don't pay the mortgage, receive any income, or live in the house, you are holding legal title for your child’s benefit. This is a classic bare trust and will require reporting.
-
Nominee Corporations: Real estate investors and developers frequently use a nominee corporation to hold legal title to a property while the beneficial ownership remains with individuals or another operating company. These corporate arrangements are not exempt and must file the required trust returns for 2026.
What You Need to Do If you are involved in a bare trust arrangement that isn't explicitly exempt, you will need to file a T3 Return and a Schedule 15 (Beneficial Ownership Information of a Trust) for the 2026 tax year. These forms require you to disclose detailed information about the trustees, beneficiaries, and settlors of the trust.
Failing to file on time can result in significant penalties—potentially up to 5% of the highest total fair market value of the trust’s assets.
Conclusion
The rules around bare trusts are complex, and the era of CRA leniency has come to a close. If you are unsure whether your bank accounts, real estate holdings, or corporate structures qualify as a bare trust under the 2026 rules, we are here to help. Contact our team today to ensure you are compliant before the filing deadline.
This blog was written using the assistance of AI.
Want to make sure it all adds up? Connect with us!
At JMH & Co., we are your partner for financial success.
Book an appointment with us or give us a call today.
Medicine Hat (403) 527-4451
Brooks (403) 362-4004
Calgary (403) 261-0835
