Bare Trusts in Ontario: Do Parent-on-Title and Joint Accounts Need a T3?

Many Ontario families hold property in a way that creates a bare trust without ever calling it that. A parent may go on title so a child can get a mortgage. A couple may put a bank account in joint names. When the federal trust reporting rules expand, people start asking whether these arrangements need a T3 return.

This article explains what a bare trust is, the current relief, the exceptions people ask about most, and the penalties for getting it wrong. It also covers how this links to estates. The rules are changing, so treat this as a general guide and confirm the current position before you rely on it.

What a bare trust is for tax purposes

A bare trust is an arrangement where the trustee can reasonably be considered to act as agent for all the beneficiaries and has no significant powers or responsibilities. For most tax purposes, Income Tax Act s. 104(1) treats it as not being a trust.

In plain words, the person on title holds the property for someone else and simply follows that person's instructions. Because the trustee has no real discretion, the law looks through the arrangement to the beneficiaries.

Do bare trusts have to file a T3 for 2026?

Bare trusts do not have to file a T3 return for tax years ending after December 31, 2024 and before December 31, 2026. For years ending on or after December 31, 2026, reportable bare trusts are subject to the trust reporting rules and may have to file.

A T3 return is due no later than 90 days after the trust's tax year-end. A trust that must file a T3 return generally must also report beneficial ownership information on Schedule 15.

The word "reportable" matters. Not every bare trust is reportable, because the exceptions below take some arrangements out of the rules.

Common exceptions people ask about

The CRA gives a joint bank account held by family members as an example of the joint owner exception. The exceptions depend on the exact facts, such as who is on title and whose home it is. If your arrangement is close to the line, get advice before assuming it is excepted.

Penalties and the link to estates

Where no tax is owing, filing a T3 late costs $25 a day, with a minimum of $100 and a maximum of $2,500. Gross negligence or knowingly false statements for a non-listed trust can cost the greater of $2,500 and 5% of the highest fair market value of the trust's property.

For estates, a bare trust is not a way around Ontario Estate Administration Tax. Ontario includes in the estate value any property the deceased owned that was held in another person's name. Putting legal title in another name does not by itself remove a beneficially owned asset from the tax.

By contrast, jointly owned assets that automatically go to the surviving owner, and assets with a named beneficiary such as RRSPs, RRIFs and TFSAs, are excluded from the estate value. Whether an arrangement is a true joint ownership or a bare trust can therefore matter for both tax reporting and the estate.

What to do next

• List every property held in someone else's name, or held by you for someone else, including homes and bank accounts.
• Note who paid for each asset, who is on title and who benefits.
• Check the current CRA FAQ on bare trusts, because the status of the s. 150(1.31) exceptions may change.
• Keep records of why you think an exception applies, such as the mortgage arrangement for a child's home.
• If you are an estate trustee, tell your lawyer about any assets held in another name before filing for Estate Administration Tax.

A lawyer or accountant can confirm whether an arrangement is a bare trust, whether it is reportable and how it affects an estate.

Frequently asked questions