Confusion and anxiety have surrounded "Bare Trust" reporting requirements for the past few years, with many Canadians unsure if their family banking arrangements would trigger significant tax filings. However, there is good news for the 2026 filing season. The Canada Revenue Agency (CRA) has confirmed that bare trusts do not need to file T3 returns for the 2025 tax year (filing due spring 2026).
This announcement provides significant relief for taxpayers who were facing the administrative burden and potential penalties associated with these new rules. While the immediate pressure is off, it is vital to understand what these arrangements are so you remain prepared should the legislation shift again in the future.
What is a Bare Trust?
A "bare trust" occurs when a trustee creates a legal arrangement to hold property for a beneficiary, but the trustee has no independent power, discretion, or responsibility over the property. The trustee’s only role is to hold the legal title.
You might be part of a bare trust arrangement without even realizing it. Common examples include:
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Joint Bank Accounts: An elderly parent adds an adult child to their bank account solely to help pay bills or manage finances. The child has no beneficial interest in the money; they are simply on the title for administrative ease.
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Co-Signing Mortgages: A parent appears on the title of a child’s home solely to assist with mortgage qualification. The parent does not live in the home or consider it their asset, but legally, their name is on the deed.
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In-Trust Accounts: A parent or grandparent opens an investment account or bank account "in trust" for a minor child, where the funds strictly belong to the child.
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Cottage Co-Ownership: Family members are listed on the title of a vacation property for probate planning purposes, even if they do not effectively "own" the asset in terms of usage or equity.
What Does This Exemption Mean for You?
or the 2025 tax year, you are exempt from the requirement to file a T3 Trust Income Tax and Information Return for these specific arrangements. This waiver prevents thousands of Canadians from having to engage professional accountants for what are often simple, non-income-generating family arrangements.
However, this relief is specific to the 2025 tax year. The government is continuing to refine trust reporting legislation to catch tax evasion without overburdening regular Canadians.
The Bottom Line
You can breathe a sigh of relief this spring—no T3 filing is required for these specific bare trust arrangements. However, we strongly recommend keeping your documentation organized. Proof of beneficial ownership and the intent behind these arrangements may still be required if the CRA asks questions or if the reporting rules are reintroduced for the 2026 tax year.
This blog was written using the assistance of AI.
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