Introduction

Navigating Bare Trusts: A simple guide to understanding your ownership, real-world examples, and the latest CRA filing updates from Bill C-15.

If you’ve heard the term "Bare Trust" recently, you aren't alone. It has become one of the most talked-about (and confusing) topics in Canadian tax law. At its simplest, a bare trust is a situation where one person’s name is on the title of an asset, but the asset actually belongs to someone else.

Whether you are helping a child buy a home or managing a corporate holding company, you might be part of a bare trust without even realizing it. 

What Exactly is a Bare Trust?

In a "true trust," a trustee has the power to make decisions. In a bare trust, the trustee acts simply as a representative who must follow the owner's instructions and has no independent control over the property.

·       The Trustee: Holds the legal title (the name on the deed or bank account). 

·       The Beneficial Owner: Has the real "say" over the property, receives all the income from it, and is responsible for it. 

Common Examples: Are You in a Bare Trust?

Bare trusts are incredibly common in everyday life. Here is how they typically look for individuals and businesses:

For Individuals (Personal Scenarios)

·       Co-signing a Mortgage: You are on the title of your child’s home solely to help them get bank financing. 

·       Adding a Child to a Bank Account: You add an adult child to your account so they can help you pay bills or for estate planning. 

·       In Trust For (ITF) Accounts: You hold an investment account for a minor child until they reach a certain age. 

·       Real Estate for Kids: You buy a condo for your university-aged child; your name is on the title, but it is "their" home. 

For Corporations (Business Scenarios)

·       Nominee Companies: A "shell" company holds land for a developer to keep the project private. 

·       Corporate Groups: One corporation in a group holds the legal title to equipment or vehicles used by a sister company. 

·       Real Estate Holding: A corporation holds a property as an agent for a group of joint-venture partners. 

The Big Question: Do I Need to File a Tax Return?

The rules have been changing rapidly. Here is the current status as of early 2026:

1.    2023 Tax Year: The CRA waived the filing requirement for bare trusts. 

2.    2024 & 2025 Tax Years: Based on the latest updates from Bill C-15, the CRA does not expect bare trusts to file a T3 return or Schedule 15 for these years. 

3.    2026 and Beyond: Certain bare trusts will be required to file for years ending on or after December 31, 2026. 

New Exemptions (The "Safe Zones")

The government has introduced "carve-outs" to help regular families avoid unnecessary paperwork. Under the proposed rules, you may be exempt from filing if:

·       The assets are worth $50,000 or less throughout the year. 

·       The trust holds assets up to $250,000 (like cash or GICs) AND the owners/trustees are related family members. 

·       It is a specific lawyer's trust account or a professional account meeting certain limits. 

Why the Rules Changed

The goal of these expanded reporting rules is to help the government identify the "beneficial owners" of assets to combat tax evasion and money laundering. While the intent is clear, the CRA has acknowledged that the original rules were too broad, leading to the current exemptions for common family arrangements. 

Next Steps for You

Don't wait until the 2026 deadline to figure this out. If your name is on an asset that you don't "truly" own—or if someone else's name is on your asset—you should document the arrangement now.