- Bare trusts are not expected to file a T3 or Schedule 15 for taxation years ending on or after December 31, 2024 and before December 31, 2026, so there may be nothing late.
- Where a T3 is required and late, the penalty depends on whether tax is unpaid, and a bare trust usually has no tax payable.
- Whether relief or a voluntary disclosure is available depends on your facts, so confirm with a lawyer or accountant before you act.
You may have realized a T3 return for a trust should have been filed and was not. Before worrying about penalties, it helps to ask a first question: was a return actually required for that year?
For bare trusts the answer has recently changed, and the answer decides whether there is a penalty to cancel at all. This article explains the timing rules and the penalties, and where a lawyer or accountant can help with relief and disclosure.
This article covers Canadian federal tax law, which applies in every province.
First, was a T3 required for your bare trust?
A bare trust is an arrangement where the trustee acts as agent for the beneficiaries and only holds legal title. It is generally treated as not being a trust for the purposes of the Income Tax Act, with some exceptions.
For taxation years ending in 2025, the CRA does not expect bare trusts to file a T3 return, including Schedule 15. More broadly, bare trusts are not subject to the trust reporting rules, and 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 trust reporting rules for taxation years ending on or after December 31, 2026. If your late filing relates to a year before that, you may have no filing obligation to be late on. If the trust is an ordinary (express) trust, different rules apply.
How late-filing penalties work
A T3 return is due no later than 90 days after the trust's tax year-end, and any balance owing is due in the same 90 days. Which penalty applies depends mainly on whether there is unpaid tax.
| Situation | Penalty |
|---|---|
| Unpaid tax on the due date | 5% of the unpaid tax, plus 1% for each full month late, to a maximum of 12 months |
| Demand to file and a late-filing penalty already assessed in the three preceding years | 10% of the unpaid tax plus 2% for each full month late, to a maximum of 20 months |
| No unpaid tax on the due date | $25 a day, with a minimum of $100 and a maximum of $2,500 |
A bare trust usually has no tax payable, so the daily penalty is the likely one.
Other penalties to know about
For a non-listed trust, a person who knowingly, or with gross negligence, makes a false statement or omission, or fails to file, faces a penalty of the greater of $2,500 and 5% of the highest fair market value of the trust property.
Missing Schedule 15 information, such as tax identification numbers, leaves the schedule incomplete, and the CRA says the trust has then not met its filing obligations. A person who fails to give their tax identification number to the trustee may face a $100 penalty for each failure.
Relief and voluntary disclosure
Whether the CRA will cancel or reduce a penalty, or whether a voluntary disclosure is open to you, depends on the facts: why the return was late, whether the CRA has already contacted you, and what is still unfiled. The CRA decides these requests, and no outcome can be assumed.
If you are unsure whether the trust is a bare trust at all, note that the CRA says it cannot give definitive determinations on whether a trust exists. Whether a bare trust exists is a question of fact, and the CRA suggests consulting a legal advisor if unsure.
What to do next
- Write down the trust's year-end and the year the late return relates to.
- Confirm with a lawyer or accountant whether the arrangement is a bare trust or an express trust.
- Check whether any exception applies, such as a listed trust that files only if requested.
- Gather the names, addresses, dates of birth and tax identification numbers needed for Schedule 15.
- Keep any CRA letters, and ask a professional about relief or disclosure before you file anything further.
Acting early and with advice generally leaves you better placed than waiting for a CRA letter.
Frequently asked questions
Do I owe a penalty if my bare trust did not file a T3 for 2025?
For taxation years ending in 2025, the CRA does not expect bare trusts to file a T3 return, including Schedule 15. A bare trust that is not required to file has nothing to file. Confirm the arrangement really is a bare trust first.
When do bare trusts first have to file?
Reportable bare trusts are subject to the trust reporting rules for taxation years ending on or after December 31, 2026. The first returns are for the 2026 year, due 90 days after year-end.
What is the likely penalty for a late bare trust return?
If there is no unpaid tax on the due date, the alternative 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.
Can I ask the CRA to cancel a penalty?
Whether relief is available depends on your circumstances, and the CRA makes the decision. A lawyer or accountant can tell you whether a request or a voluntary disclosure suits your situation.
Sources
- CRA – T3 Trust Guide 2025 — canada.ca
- CRA – Important updates to the trust reporting requirements for the 2025 taxation year — canada.ca
- CRA – Enhanced reporting rules for trusts and bare trusts: FAQ — canada.ca
- CRA – When to file a trust's T3 return — canada.ca
- CRA – T3 Trust Guide (T4013) — canada.ca
Links go to official government, court and regulator pages. The law changes — confirm you are reading the current version.
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