Does Putting an Adult Child on My Bank Account Create a Bare Trust in Canada?
This answer covers Canadian federal tax law, which applies in every province.
It depends on the facts. Whether a bare trust exists is a question of fact, and CRA says it cannot give definitive determinations on whether a trust exists. If your child is on the account only so they can help you, with you remaining the one who benefits, the arrangement may look like a bare trust, where the legal owner has no significant powers and only holds legal title.
The deemed-trust rule in s. 150(1.3) does not apply where every beneficiary is also a legal owner and no legal owner is a non-beneficiary; CRA's example is a joint bank account held by family members for the use and benefit of each of them.
For interest, CRA guidance says that on a joint account you generally report your share based on how much you contributed. For a reportable bare trust, income, capital gains and capital losses are reported on the beneficial owner's return, not by the trustee on the trust's T3. For taxation years ending on or after December 31, 2024 and before December 31, 2026, bare trusts need not file a T3 or Schedule 15. A lawyer or accountant can help you confirm your situation.
Key takeaways
- Whether a bare trust exists is a question of fact, and CRA says it cannot give definitive determinations on whether a trust exists.
- A joint account where every beneficiary is also a legal owner, and no legal owner is a non-beneficiary, falls outside the deemed-trust rule.
- For a joint bank account, you generally report your share of the interest based on how much you contributed.
- Bare trusts need not file a T3 or Schedule 15 for taxation years ending on or after December 31, 2024 and before December 31, 2026.