Bare Trust vs Regular Trust: How CRA Tells Them Apart for Tax in Canada

Many Canadians hold property in someone else's name or share a title with a family member without ever calling it a trust. For tax purposes, though, the label matters less than how the arrangement actually works. CRA looks at who holds legal title, who controls the property and who benefits.

This article explains the difference between a bare trust and a regular (express) trust, who reports the income, and how the new reporting rules change things. Related topics, such as exemptions, filing details and who the beneficial owner is, are covered in separate articles.

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

What CRA means by a bare trust

The Income Tax Act does not define "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.

A trustee generally qualifies as an agent, a bare trustee, 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.

How a regular express trust differs

In a regular trust, the trustee holds and manages property under a trust document and has real powers and duties. The trust files its own T3. In a bare trust, the trustee is only an agent with legal title.

The new reporting rule: s. 150(1.3)

Section 150(1.3) of the Income Tax Act says that, for section 150 and s. 204.2 of the Income Tax Regulations, 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 users or beneficiaries are deemed beneficiaries.

CRA calls this a reportable bare trust. It includes an arrangement that would not otherwise be considered a trust under the Act. Bill C-15, the Budget 2025 Implementation Act, No. 1, received royal assent on March 26, 2026, and contains the amended s. 150(1.2) and the new s. 150(1.3) and (1.31). How this applies to your own arrangement depends on the facts, so it is worth confirming with a lawyer or accountant.

There are exceptions. The deemed-trust rule does not apply where every beneficiary is also a legal owner and no legal owner is a non-beneficiary, such as a joint bank account held by family members for each of their use and benefit. It also does not apply to certain principal-residence arrangements between related individuals or spouses and common-law partners. Other exclusions cover partnerships, court orders and certain regulated holders.

Who reports the income, and when filing starts

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, not on the trust's T3.

On timing, CRA does not expect bare trusts to file a T3, including Schedule 15, for taxation years ending in 2025. Bare trusts are not subject to the trust reporting rules for years ending on or after December 31, 2024 and before December 31, 2026. Reportable bare trusts are subject to the rules for years ending on or after December 31, 2026, so the first returns are for 2026 and are due 90 days after year-end, which is March 31, 2027 for a December 31 year-end.

• Relief for 2024 and 2025 is administrative, so it is worth confirming current CRA guidance before relying on it.
• A reportable bare trust that is also a listed trust is not required to file unless it is requested to file.
• Late-filing penalties matter only once a T3 is required and is not filed by the due date. If the trust then has no unpaid tax, the alternative penalty is $25 a day, with a minimum of $100 and a maximum of $2,500, and a bare trust usually has no tax payable.

Whether you have a bare trust is a question of fact

CRA says it cannot give legal advice or 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.

Two arrangements that look the same on paper can be treated differently. A person who is a true joint owner is not in the same position as someone added to title only to help out, and the answer depends on the facts.

What to do next

• Gather the title documents, account agreements and any written agreement showing who controls the property.
• Note who can give instructions, who pays the costs and who receives the income.
• Check whether an exception, such as a joint account or a principal residence held by related individuals, may apply.
• Confirm CRA's current trust pages, since guidance has been changing.
• Speak to a lawyer or accountant if it is unclear whether your arrangement is a bare trust.

Separate articles cover the exceptions, the filing steps and how to identify the beneficial owner in more detail.

Frequently asked questions