You May be a "Trustee" with Tax Filing Requirements, and Not Even Know It

March 23, 2024 by David Christianson

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OK, spring is officially here, so it’s time to get serious about income tax preparation. Pay attention, as new rules may affect you in ways you never imagined.

Please consult your tax professional if any of these items might apply to you. 

Government tax rules have been changing so quickly over the last couple of years that CRA has had to several times delay new filing deadlines. I was not going to suggest that any of these items - like the underused housing tax, new trust reporting, and others - have been forced on the CRA by the government prematurely, but…

Having read through (several times) the new CRA reporting rules regarding trusts and the incredibly complex new rules that can suddenly make every joint account with an elderly parent or account held on behalf of a child subject to filing a T3 return and a new Schedule 15, I am now tempted to counsel civil disobedience.

However, I am not allowed to do that. Luckily, CRA has taken care of some of that, acknowledging last week that the new rules are so complex that they will not impose the new onerous penalties on innocent taxpayers (while reminding us that they could) unless a taxpayer’s inability to understand these Byzantine new requirements is considered “egregious”.

Don’t stop reading simply because you aren’t a trustee or beneficiary of a formal trust. Starting with the filings for 2023 - due April 2! – you may very well be one of those taxpayers who now must file a T3 return, to your complete surprise. Penalties for late filing are $25 per day to a maximum of $2,500, and conviction of failure to file can mean fines of up to $25,000 and up to 12 months in prison.

Informal trust arrangements (where someone looks after property for another person) and “bare trusts” are now potentially required to file T3 and Schedule 15 disclosure returns.

Bare trusts exist where the “trustee” holds legal title to the property but has zero discretion or responsibility other than to transfer title on demand of the beneficiary. These may be formal or informal.

It is possible that the following guideline might help, but we don’t really know, as CRA has not yet answered questions from numerous professional groups.

This is the example of an adult child looking after an elderly parent. If a bank or investment was opened in joint name, or the younger child added to the title of the account (with all funds coming from the parent), one of two things may have happened.

1.     The parent transferred 50% of the assets to the child (beneficially as well as legally), in which case they would have been each claiming 50% of the income on their respective tax returns. In this case, no trust exists. It is true joint ownership.


2.     The parent only transferred legal ownership and not beneficial ownership. The parent retained all rights and continued to claim all investment income. In this case, CRA may consider this a bare trust arrangement, and the new reporting rules apply.

Remember this is not legal or tax advice, just an attempt aid understanding.

There are 26 exemptions to the new requirements, (called “listed trusts”) but several of these have exemptions to the exemptions, so may still be caught.

For example, a “trust” does not need to file a T3 if:

-        Total property does not exceed $50,000 at any time during the year;

-         All property is in “money” or publicly traded investments;

However, if the “trust” earns more than $500 in income or more than $100 is paid to any one beneficiary (in this case, the elderly parent), then filing is required. Also, a trust must file if it has tax payable.

Note that a gold or silver coin, collectible or other such property is not considered “money”, so any trust holding such an item would need to file.

My advice?  Get professional advice, and do it soon.

Now I have run off and complete my T3 and Schedule 15, and get it filed on time.

Not #TaxAdvice #TrustReporting #FPCanada #financialplanning

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Dollars and Sense is meant as an introduction to this topic and should not in any way be construed as a replacement for personalized professional advice.

Please consult legal, tax, insurance and investment experts for advice on your unique situation.


David Christianson, BA, CFP, R.F.P., TEP, CIMmis a Senior Wealth Advisor and Portfolio Manager with Christianson Wealth Advisors at National Bank Financial Wealth Management, and author of the book Managing the Bull, A No-Nonsense Guide to Personal Finance

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