Which Bare Trust Arrangements Are Excluded From T3 Reporting in Canada?

Many Canadians hold property in a way that looks like a trust without ever having signed a trust document. A parent on title to help a child get a mortgage, or a name added to a bank account, are common examples. New federal rules can treat some of these arrangements as trusts for reporting purposes.

This article walks through the exclusions that take an arrangement out of those rules, as a checklist. It covers federal income tax only. It is general information, and your facts decide the outcome.

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

How section 150(1.3) catches agency arrangements

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

Section 150(1.3) is one of those exceptions. For section 150 purposes, an express trust includes an arrangement where a legal owner holds property for the use or benefit of others and can reasonably be considered to act as their agent. The legal owner is deemed a trustee and the others are deemed beneficiaries. CRA calls this a reportable bare trust.

Reportable bare trusts are subject to the trust reporting rules for taxation years ending on or after December 31, 2026. Bill C-15 received royal assent on March 26, 2026, and the Act contains the new section 150(1.3) and (1.31).

The exclusions in section 150(1.31)

Section 150(1.31) lists the arrangements where the deemed-trust rule does not apply. Go through each one against your own facts.

• (a) 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.
• (b) The legal owners are related individuals and the property is real property that would be the principal residence of one or more of them. CRA says this covers a parent on title so a child can get a mortgage.
• (c) An individual holds real property for the use of a spouse or common-law partner, and it would be the owner's principal residence. CRA's example is spouses living in the family home with only one on title.
• (d) Property is held solely for a partnership by its partners, and a partnership return is filed.
• (e) A court order requires the legal owner to hold the property.
• (f) Canadian resource property is held for qualifying corporations or partnerships.
• (g) Government funds are held for section 149(1) persons who are the legal owners.
• (h) Property is held by a registered securities dealer or a regulated trust company that issues an information return to all beneficiaries.

For the principal-residence exclusion, CRA treats related persons as individuals connected by blood relationship, marriage, common-law partnership or adoption. Whether other family situations, such as an adult child on title, fit is not something to assume, so check with a lawyer or accountant.

Other exemptions: listed trusts and small trusts

Separately from section 150(1.31), a resident express trust must file a T3 unless a listed condition in section 150(1.2) applies. These include existing for less than three months, or holding assets with a total fair market value not exceeding $50,000 throughout the year. Other exemptions cover registered charities, mutual fund trusts, graduated rate estates and certain registered plans.

Another exemption applies when every trustee is an individual, every beneficiary is an individual related to each trustee (or a graduated rate estate of one), total fair market value is at most $250,000 at all times, and the assets are only listed low-risk types such as cash, GICs, listed securities and mutual funds.

A reportable bare trust that is also a listed trust is not required to file unless it is requested to file.

Timing, and the question of fact

Relief for earlier years is administrative, so it describes what CRA expects rather than what the law says. A bare trust that is not required to file for 2025 has nothing to file.

CRA says it cannot give definitive determinations on whether a trust exists. Whether a bare trust exists is a question of fact, and CRA suggests consulting a legal advisor if you are unsure.

If no exclusion applies, and what to do next

If no exclusion or exemption fits, the first returns are for the 2026 year and are due 90 days after year-end, which is March 31, 2027 for a December 31, 2026 year-end. Schedule 15 must be filed each taxation year with the T3 return, even if there are no changes. It asks for the name, address, date of birth (individuals), country of residence and a tax identification number of all trustees, settlors, beneficiaries and controlling persons. Missing tax identification numbers leave the schedule incomplete, and CRA says the filing obligation has not been met.

If tax is not unpaid on the due date, the late-filing penalty is $25 a day, with a minimum of $100 and a maximum of $2,500. A bare trust usually has no tax payable, so this is the likely penalty. Someone who knowingly, or with gross negligence, makes a false statement or omission, or fails to file, for a non-listed trust faces a penalty of the greater of $2,500 and 5% of the highest fair market value of the trust property. Income, gains and losses from the property are reported on the beneficial owner's return, not the trustee's.

• List each property or account held in someone else's name, or with others on title.
• Note who can use and control it, and who is on title.
• Check each item against the exclusions above.
• Gather names, addresses, dates of birth and SINs for the people involved.
• Confirm your conclusion with a lawyer or accountant well before March 31, 2027.

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