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

Updated: September 25, 2026

Determining whether you have a bare trust and if you have reporting obligations under the additional trust reporting requirements can be complex. These rules generally require bare trusts to file annual T3 returns, and in some cases, disclose detailed information about the trust’s stakeholders, starting with the December 31, 2026 tax year, unless an exception applies. Previously bare trusts were exempt from filing. 

Although the reporting requirements began with the December 31, 2023 tax year, the CRA provided administrative relief for bare trusts for the 2023 to 2025 tax years. No further relief is anticipated.

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 type of trust in which the trustee’s only obligation is to deal with the trust property as directed by the beneficiaries. The trustee holds legal title to the property, while the beneficiary retains beneficial ownership. Ultimately, a bare trust is a principal-agent relationship where the beneficiary has complete control over the property and the trustee has no independent power, discretion, or responsibility in relation to it. 

Bare trusts are commonly used to: 

• Ensure privacy and maintain the anonymity of the true owner of a property when ownership information, such as land registration records, are public record. 
• Facilitate property transfers 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.
• Hold property on behalf of a minor child who can’t hold legal title.
• Hold legal title of a property on behalf of a group of owners in a joint venture.
• Minimize provincial land transfer taxes or probate fees in some provinces, where the beneficial ownership of property is transferred between parties, but there is no change to the legal title held by the trustee.

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. In contrast, a taxable event is triggered when beneficial ownership of the bare trust property changes, even if there is no change in legal title. All income and capital gains of a bare trust are reported on the beneficiaries’ tax returns 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.

What 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, 2026, and onwards. However, certain types of bare trusts are exempt. The detailed list of bare trust filing exclusions is below, but some common bare trust scenarios that may qualify for exclusion include:

• Spouses that have a joint bank account for the use and benefit of both spouses. 
• Both a parent and adult child are on legal title of a principal residence to allow a child to obtain a mortgage for the house the child is going to live in.
• 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.

Bare trusts are required to have a calendar year-end, so even if a bare trust is terminated in 2026, it’s still deemed to have a December 31, 2026 tax year end. The deadline for filing a T3 return is 90 days after the taxation year-end.

Trusts, including bare trusts, may also be required to file T3 Schedule 15 “Beneficial ownership information of a trust” as part of their T3 return. This form requires trusts to disclose information (i.e., name, address, date of birth, jurisdiction of tax residence, and tax information number) about the trust’s stakeholders. Stakeholders include trustees, beneficiaries and settlors of the trust, as well as 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). 

What are the bare trust filing exclusions?

Expanded exemptions from filing 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 the partnership is required to file a partnership information return (or would be if not for a CRA exemption).
• The legal owner holds the property as required by a court order. 
• All or substantially all of the trust property is Canadian resource property held solely for the use or benefit of one or more publicly listed companies (or in certain cases, their subsidiaries or partnerships). 
• Where a non-profit organization holds funds received from the federal or provincial governments solely for the use or benefit of itself and 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 holds qualifying assets and issues information slips to all beneficiaries reporting the income and gains.

Expansion of listed trust categories

The definition of “listed trusts” was also broadened. Listed trusts are generally exempt from the requirement to file T3 Schedule 15. In addition, the CRA states that a bare trust that is a listed trust is not required to file a T3 return for that period unless requested by the CRA. Some of the listed trust categories that may be relevant to bare trusts include: 

• Trusts that have existed for less than three months
• Trusts whose assets have a total fair market value (FMV) of $50,000 or less throughout the tax year
• Trusts that, generally, meet all the following conditions:

         o  All trustees are individuals.
         o  All beneficiaries are individuals who are related to each trustee (including an aunt/uncle, niece/nephew, and oneself, given the broadened definition of “related”).
         o  The total fair market value of the trust property is $250,000 or less throughout the tax year, provided the trust’s holdings are limited to certain types of assets (deposits in a qualifying Canadian financial institution, listed securities, guaranteed investment certificates issued by Canadian banks and credit unions, personal-use property, and debt obligations issued by the government or a publicly listed entity and certain other types of property).

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.

Connect with our team 

^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.}