UPDATED:   February 6, 2024

3 Expanded reporting – Does this affect you?

CRA has introduced new rules expanding the scope of individuals and entities required to file a Trust return. This is aimed at identifying beneficial owners of assets held by different individuals or entities.  The filing deadline for this Trust return is due by April 2, 2024 and failure to comply may result in penalties of up to $2,500 and further penalties based on taxes payable.

This expansion includes:

1. Express trust – If you have a trust set up pursuant to a Will or a formal written trust document, you are now required to file a Trust return.  Previously, an express trust needed to file only if it had taxes payable or sold a capital property.
2. Certain bare trust arrangement – Even without a formal trust agreement, a bare trust may exist if  a legal owner (person on the title) of a property (includes cash, investments and real estate) holds it for the benefit of another party (“beneficial owner”).   Under such an arrangement, the beneficial owner bears all the risk (responsible for all expenses related to the ownership) and entitled to all the rewards relating to that property (interest or rental income and sales proceeds).

Common examples of a bare trust arrangement include:

• You are on the title of a house that belongs to your parents for estate planning, probate purposes only.
• You are on the title of a house that belongs to your child to facilitate mortgage approval only
• You are on the title of your son’s Truck so that he would qualify for financing
• You hold a bank account or an investment account in trust for your child or grand child
• You are added to your parent’s bank or investment account to assist with its administration

Exceptions to this bare trust reporting requirement includes:

1. If the bare trust arrangement was set up for less than 3 months as of December 31, 2023
2. The bare trust holds only cash, GICs, mutual funds and publicly listed shares with total fair market value of less than $50,000 at any time during the year

Process to file this Trust return include:

1. Apply for a Trust number.  Information required for this process include:
   1. Trust name  (which can be the beneficiary’s legal name with “Trust” at the end)
   1. Trust agreement – A written summary of the nature of the trust, if there are no formal trust document.  (Titled Summary of xx Trust and including the date of creation, details of the trustee, settlor and beneficiaries may suffice)
2. Provide the identity of all parties on Schedule 15 (name, address, date of birth, country of residence and tax identification number).  These include
   1. Trustee (legal owner of the property)
   1. Beneficiaries (who really owns the asset)
   1. Settlors (who owned the asset originally) and
   1. Controlling parties (anyone with the ability to exert influence over the trustee decisions)
3. File the return by April 2, 2024

For additional information:

CRA News release

CRA Trust reporting information=

Disclaimer: Above content is provided for general information only and may not be complete or applicable in certain particular  cases.  Please contact us to verify if it applies in your case.