Bare trusts: What are they and who has to report?

Updated: March 27, 2025

Determining whether you have a bare trust and if you have reporting obligations can be complex. Additional trust reporting requirements apply to most types of trusts—including bare trusts—starting with tax years ending on December 31, 2023. These rules generally require bare trusts to file annual T3 returns, including detailed information on the stakeholders of the trust. Previously bare trusts were exempt from filing.

The CRA has announced it “doesn’t expect” bare trusts to be required to file trust returns for the 2025 tax year. This is an extension of the CRA’s previously announced relief for 2023 and 2024 bare trust returns.

Bare trust returns are still required for the 2026 tax year and onwards, subject to certain exceptions. Since it takes time to gather the required information and non-compliance penalties are significant, it’s critical to identify if you have a bare trust and prepare early. To help determine your bare trust reporting obligations, contact your local advisor. 

What is a bare trust? 

A bare trust is a specific kind of trust in which the trustee has no obligation other than to deal with the trust property as instructed by the beneficiaries. The legal title of the trust property is held by the trustee, but the beneficiary has the beneficial ownership of the property. A bare trust is essentially a principal-agent relationship, which means the beneficiary of a bare trust has complete control over the trustee’s action as it relates to the trust property and the trustee has no independent power, discretion, or responsibility over the property. 

Bare trusts are commonly used to: 

• Ensure privacy and maintain the anonymity of the true owner of a property when the ownership information, such as land registration records, are public record. 
• Minimize provincial land transfer taxes or probate fees in transactions where the beneficial ownership of a property is being transferred between multiple parties, but there is no change to the legal title held by the trustee.
• Facilitate efficient property transfer in corporate reorganizations where the legal ownership of property may otherwise need to be transferred and registered multiple times, or if the legal ownership cannot be transferred at the desired time due to administrative issues.
• Gift a minor child or children with property who can't hold a legal title.
• Hold legal title of a property on behalf of a group of owners in a joint venture or partnership.

How is the income of a bare trust taxed in Canada? 

A bare trust is generally disregarded for Canadian income tax purposes. This tax treatment allows the legal title of a property to be transferred in certain situations without triggering a taxable event when the beneficiary retains beneficial ownership of the property. Contrarily, a taxable event is triggered when beneficial ownership of the bare trust property changes, even if there's no change in legal title. All income and capital gains from the bare trust are reported on the beneficiaries’ tax return(s) and the beneficiaries are taxed—not the trust. For this reason, no tax is calculated in the T3 return for a bare trust. However, certain information must be disclosed.   

How do the current reporting requirements apply to bare trusts? 

The trustee of a bare trust must generally file an annual T3 trust return for tax years ending December 31, 2023 and onwards (given that bare trusts are required to have a calendar year-end). The deadline for filing a T3 return is 90 days after the taxation year-end.

As mentioned, the CRA announced relief from 2023, 2024 and 2025 year-end filings for bare trusts.

Most types of trusts—including bare trusts—are also required to file T3 Schedule 15, “Beneficial ownership information of a trust” as part of their T3 return “Beneficial ownership information of a trust” as part of their T3 return, with some exceptions. T3 Schedule 15 reports additional information (i.e., name, address, date of birth, jurisdiction of tax residence, and tax information number) about the trust’s stakeholders. Such stakeholders include trustees, beneficiaries and settlors of the trust, and anyone who has the ability (through the trust terms or a related agreement) to exert control or override trustee decisions over the appointment of income or capital of the trust (i.e., a protector). 

However, certain bare trusts are exempt from completing T3 Schedule 15. Specifically, bare trusts that have been in existence for less than three months, or that hold assets worth a total fair market value (FMV) of $50,000 or less throughout the tax year (provided their holdings are limited to money, government debt obligations, and listed securities).

What are the changes in Bill C-15?

Enacted on March 26, 2026, Bill C-15 amended what constitutes a bare trust for the purposes of the trust reporting requirements. Bill C-15 also exempts certain types of bare trusts from filing a trust return, beginning with tax years ending December 31, 2026. However, there are still many common bare trusts that don’t meet any of the exemptions.

Expanded exemptions from filing T3 returns

Starting with 2026 T3 returns, a bare trust is exempt from filing a T3 return where throughout the year:

• All beneficiaries are legal owners of the trust property and all legal owners are beneficiaries of the bare trust.
• The legal owners are all related individuals (expanded to include an aunts/uncles and nieces/nephews), and the property is real or immovable property that could be designated a principal residence of at least one of these owners.
• The legal owner is an individual, the property is real or immovable property held for the use or benefit of their spouse or common-law partner, and that property could be designated as the owner’s principal residence.
• Each legal owner is a partner holding the property solely for the use or benefit of the partnership, and at least one partner is required to file an information return for the partnership.
• The legal owner holds the property as required by a court order.
• All or substantially all of the trust property is Canadian resource property that is held solely for the use or benefit of one or more publicly listed companies (or in certain cases, subsidiaries or partnership of such companies).
• Where a non-profit organization holds funds received from the federal or provincial governments for the use or benefit of other non-profit organizations.
• Where the trustee is acting in the capacity of a registered securities dealer or a regulated trust company is acting as an investment entity (as defined), provided the trust only hold qualifying assets and issues information slips to all beneficiaries reporting the income and gains.

Based on these amendments, some common bare trusts that appear to be exempt include:

• Spouses that have a joint bank account for the use and benefit of both spouses.
• A parent that is on legal title of a principal residence in addition to an adult child, to allow a child to obtain a mortgage.
• Spouses that jointly occupy a family home that could be designated as a principal residence, but only one spouse is on legal title.

Note that there are still many common bare trusts that wouldn’t meet these exemptions.

Additional exemptions from filing T3 Schedule 15

Bill C-15 also broadened the list of exemptions from the requirement to file T3 Schedule 15, some of which are relevant to bare trusts.

It’s important to note that even if a T3 Schedule 15 exemption has been met for a tax year, the trust may still be required to file a T3 return.

What are the non-compliance penalties? 

The penalty for failing to file a T3 return on time is $25 a day (minimum $100, maximum penalty of $2,500). An additional penalty equal to the greater of $2,500 or 5% of the maximum value of the property held during the taxation year by the trust may apply where a failure to file was made knowingly or due to gross negligence. 

It’s important to determine your bare trust reporting obligations in advance of the filing deadline, contact your local advisor or reach out to us here. 

^Disclaimer 

^{The information contained herein is general in nature and is based on proposals that are subject to change. It is not, and should not be construed as, accounting, legal, or tax advice or an opinion provided by Doane Grant Thornton LLP to the reader. This material may not be applicable to, or suitable for, specific circumstances or needs and may require consideration of other factors not described herein.}