Bare Trust Reporting for Real Estate Held for an Investor in Canada

Investors sometimes have a nominee or holding-title corporation register real estate in its name while the investor keeps the real economic interest. Lenders, developers and investors may all use this kind of arrangement.

This article explains how CRA looks at it as a bare trust, who reports the income, when reporting starts, and a related point under the Underused Housing Tax.

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

Why a nominee corporation can be a bare trust

CRA uses the term bare trust for an arrangement where the trustee acts as agent for all beneficiaries. A trustee generally qualifies as an agent when it has no significant powers, cannot act without the beneficiary's instructions and only holds legal title.

CRA describes a reportable bare trust as an express trust where a legal owner can reasonably be considered to act as agent for the beneficiaries, including an arrangement that would not otherwise be considered a trust. Whether a bare trust exists is a question of fact, and CRA suggests consulting a legal advisor if unsure.

Who reports the income and gains

For a reportable bare trust, all income, capital gains and capital losses from the trust property should be reported on the beneficial owner's tax return. If your investor arrangement is a reportable bare trust, that beneficial owner is the investor, not the nominee corporation acting as trustee, but whether a bare trust exists is a question of fact.

If a T3 is filed for a reportable bare trust, only the fields CRA marks need completing and the other parts can be left blank. If there is no governing document name, CRA says to list the beneficial owner's legal name followed by the word Trust.

When reporting starts

The first returns are for the 2026 year, due 90 days after year-end. A reportable bare trust that is also a listed trust is not required to file unless it is requested to file.

Exceptions and the Underused Housing Tax

Section 150(1.31) excludes some arrangements, including property held solely for a partnership by its partners where a partnership return is filed, and property held by a registered securities dealer or regulated trust company that issues an information return to all beneficiaries. Whether a nominee corporation fits one of these depends on its facts.

For the Underused Housing Tax, a trust is not a person, and the trustee who owns the residential property is the owner and files Form UHT-2900 for the year if an affected owner. CRA interprets trust to include a bare trust for the excluded-owner rules, so a corporation owning as trustee of a bare trust has to file. A beneficiary is not an owner under the land registration test.

Affected owners do not need to file a UHT return or pay the tax for 2025 and subsequent calendar years, but filing and payment still apply to the 2022, 2023 and 2024 calendar years.

What to do next

• Find the written agreement between the investor and the corporation.
• Confirm who gives instructions and who has any real powers.
• If the arrangement is a reportable bare trust, make sure the investor reports income, gains and losses on their own return.
• Check for earlier UHT filings for 2022 to 2024.

Penalties can apply for knowingly, or with gross negligence, making a false statement or omission, or failing to file, for a non-listed trust. A lawyer or accountant can confirm how these rules apply to your structure.

Frequently asked questions