Adding an Adult Child to Your Account: Bare Trust in Canada?

Many seniors add an adult child to a bank account so someone can pay bills if they fall ill. Others add a child to the title of a home for the same convenience. It is a sensible-sounding step, but it can raise a tax question: has this created a bare trust, and does that mean new paperwork with the Canada Revenue Agency (CRA)?

The short answer is that it depends on why the child was added and what they can do with the property. This article explains the general rules, the exceptions that often apply, and what to gather before you speak with an advisor.

This article covers Canadian federal tax law, which applies in every province.

What makes an arrangement a bare trust

The CRA uses the term bare trust for an arrangement where the trustee acts as agent for all beneficiaries. Such an arrangement is generally treated as not being a trust for the purposes of the Income Tax Act, with some exceptions.

A trustee generally qualifies as an agent when the trustee has no significant powers, cannot act without the beneficiary's instructions, and only holds legal title. The beneficiary is the beneficial owner and the trustee is the legal owner.

So a child added only to help with bills, who cannot act without your instructions and has no right to the money, may look like an agent holding legal title. A child who is meant to share ownership is different. Which one applies is a question of fact, and the CRA says it cannot give definitive determinations on whether a trust exists.

Joint accounts: the family exception

Section 150(1.3) can deem a legal owner who holds property for others, and can reasonably be considered their agent, to be a trustee. But under section 150(1.31)(a), that rule does not apply where every beneficiary is also a legal owner and no legal owner is a non-beneficiary. The CRA's example is a joint bank account held by family members for the use and benefit of each of them.

The words that matter are use and benefit of each of them. If the account is truly shared, the exception fits. If the child is on the account only as a signing convenience, the facts may be different, and you should have them reviewed.

Separately from the trust question, tax on the account's interest still has to be reported by someone. For a joint bank account, CRA guidance says you generally report your share of interest based on how much you contributed.

Adding a child to the title of a home

Homes have their own exceptions. Under section 150(1.31)(b), the deemed-trust rule does not apply where the legal owners are related individuals and the property is real property that would be the principal residence of one or more of them. The CRA says this covers a parent on title to allow a child to obtain a mortgage.

Under section 150(1.31)(c), an individual who holds real property for the use of a spouse or common-law partner is excluded if it would be the owner's principal residence. The CRA's example is spouses jointly occupying a family home with only one on title.

Related persons for this purpose include individuals connected by blood relationship, marriage, common-law partnership or adoption. These exceptions are tied to principal residences, so a rental property or a cottage that would not be anyone's principal residence is not automatically covered.

Reporting duties and when they start

For taxation years ending in 2025, the CRA does not expect bare trusts to file a T3 return, including Schedule 15. Bare trusts are not subject to the trust reporting rules for taxation years ending on or after December 31, 2024 and before December 31, 2026.

Reportable bare trusts are subject to the rules for taxation years ending on or after December 31, 2026. The first returns are for the 2026 year, due 90 days after year-end, which is March 31, 2027 for a December 31, 2026 year-end.

• Schedule 15 requests name, address, date of birth (for individuals), country of residence and a tax identification number for all trustees, settlors, beneficiaries and controlling persons.
• On a T3 filed for a reportable bare trust, only the fields marked with a check mark need completing, and the other parts can be left blank.
• If a late filing leaves no unpaid tax, the alternative penalty is $25 a day, with a minimum of $100 and a maximum of $2,500.
• A person who fails to give their tax identification number to the trustee may face a $100 penalty for each failure.

What to do next

• Write down why your child was added and what they are allowed to do with the account or property.
• Collect bank account agreements, title documents and any written instructions.
• Note whether the property is, or would be, a principal residence of an owner.
• Check whether any non-owner has the right to use or benefit from the property, since the joint-account exception depends on that.
• Keep your child's tax identification details ready in case reporting applies.
• Ask a lawyer or accountant to review the facts before the 2026 year-end.

Frequently asked questions