Are Joint Accounts With a Parent and Child a Bare Trust in Canada?

Adding an adult child to an aging parent's bank account is common. It can make paying bills easier. But the CRA's bare trust reporting rules ask a question many families have never considered: is the child really an owner, or only a helper whose name is on the account?

This article explains the test the CRA uses, the exception for true joint owners, and how to report interest. The answer for any account depends on the facts, so treat this as a starting point.

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

Two very different arrangements

The 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 the trustee has no significant powers, cannot act without the beneficiary's instructions, and only holds legal title.

Apply that to an account. If a child is on the account only to pay a parent's bills and must follow the parent's instructions, the child looks like an agent holding legal title. If parent and child both own the money and are both entitled to use it for themselves, that looks like true joint ownership.

The exception for true joint owners

Under section 150(1.31)(a), the deemed-trust 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 deemed-trust rule itself captures 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. So the two questions are:

• Is the child on the account for the use and benefit of both of you, as with true joint ownership?
• Or is the child a legal owner who is not a beneficiary, acting as agent for the parent?

The CRA says whether a bare trust exists is a question of fact, and it cannot give definitive determinations on whether a trust exists. Bank forms, any written agreement, how the account is used and what the parent intended all help show the facts.

Reporting interest and other income

For a joint bank account, CRA guidance says you generally report your share of interest based on how much you contributed.

If the account is a reportable bare trust, the CRA says all income, capital gains and capital losses from the trust property should be reported on the beneficial owner's tax return, and the trustee does not report them on the trust's T3. In a parent and child setting where the parent supplied the money and the child is only an agent, this points to the parent as the person who reports.

Do you have to file a T3 or Schedule 15?

Bare trusts are not subject to the trust reporting rules, and so need not file a T3 or Schedule 15, 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, with first returns due 90 days after year-end, which is March 31, 2027 for a December 31, 2026 year-end.

If a filing is needed, Schedule 15 asks for the name, address, date of birth, country of residence and tax identification number of trustees, settlors, beneficiaries and controlling persons. Where the trust has no governing document name, the CRA says to list the beneficial owner's legal name followed by the word Trust.

What to do next

• Find out how the account was opened and what the bank documents say about ownership.
• Decide, and write down, whether your child was meant to share the money or only help manage it.
• Keep records of who put money in and who takes money out.
• Check how interest is being reported on each person's return.
• Speak with a lawyer or accountant before the 2026 year-end, since reportable bare trusts are caught from then.

A lawyer can also help with related questions, such as how the account fits with a will or a power of attorney.

Frequently asked questions