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What new bare trust tax filing rules mean for Canadians
– moneysense.ca
I would like some clarification on the T3 tax return for the year 2023. Whom does this rule apply to and can you clarify whether all the persons on the account have to complete T3 tax returns?
—Chander
Some people set up trusts that come into effect during their lives or upon their deaths. Trusts may be used to reduce taxes or to provide certain protections for young or vulnerable beneficiaries. A lot of Canadians don’t realize they have a trust. And new tax rules for so-called bare trusts mean they will also have to file trust tax returns for 2023.
What is a bare trust?
The Income Tax Act does not specifically define a bare trust, Chander. The Canada Revenue Agency (CRA) says: “A bare trust for income tax purposes is a trust arrangement under which the trustee can reasonably be considered to act as agent for all the beneficiaries under the trust with respect to all dealings with all of the trust’s property.”
Essentially, a bare trust may exist when someone holds legal title to an asset, but some or all of the asset technically belongs—meaning it beneficially belongs—to someone else…
