The federal government recently introduced new reporting requirements for trusts intended to ensure the effectiveness and integrity of the Canadian tax system. In addition to requiring most trusts to file income tax returns, the new rules require additional disclosure including the names, addresses, date of birth, jurisdiction of residence and taxpayer identification number of those involved with the trust, including settlors, trustees, beneficiaries and any persons who can exert influence on the trust. The new annual reporting requirements are effective for trusts with a yearend of December 31, 2023, with a due date of April 2, 2024 for the 2023 tax year.
These rules were also extended to “bare trusts”, an arrangement under which a trustee can reasonably be considered to act as agent for all beneficiaries under the trust with respect to all dealings with all of the trust’s property.
There has been a considerable amount of confusion as to whether certain structures, such as in-trust accounts for minors and joint accounts between parent and child might be considered bare trusts for these purposes, and therefore subject to the new trust reporting requirements. On Thursday March 28, 2024, the CRA indicated that it “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 official announcement is HERE
The CRA went on to say that over the coming months it will work with the Department of Finance to further clarify its guidance on this filing requirement and will communicate with Canadians as further information becomes available.
This is welcome relief for many who are part of bare trust arrangements as they will no longer be required to file T3 income tax returns, including the new disclosures, for their bare trusts for the 2023 tax year.
If you require any assistance or have any questions please do not hesitate to reach out to our TSG team.