Is a Nominee Corporation Holding Property a Bare Trust in Canada?

Owners and developers often put title to land or other property in a nominee or holding corporation. The corporation's name appears on title, while someone else pays the costs, makes the decisions and receives the benefit.

For tax purposes, that kind of arrangement can be treated as a bare trust, and new reporting rules reach many of them starting with the 2026 year. This article explains how CRA approaches the question, which exceptions exist and what filing may look like.

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

A regular trust is different. There, the trustee holds and manages property under a trust document with real powers and duties, and the trust files its own T3 return.

When a nominee corporation can look like a bare trust

For reporting purposes, section 150(1.3) of the Income Tax Act says 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 to be a trustee, and the users or beneficiaries are deemed to be beneficiaries.

CRA calls this a reportable bare trust, and says it includes an arrangement that would not otherwise be considered a trust under the Act. A nominee corporation that simply holds title and follows the real owner's instructions is the kind of arrangement that question is aimed at.

Whether a bare trust exists is a question of fact. CRA says it cannot give definitive determinations on whether a trust exists and suggests consulting a legal advisor if you are unsure. Documents such as a nomination or agency agreement, and how the arrangement works in practice, are usually the starting point.

Exceptions that may take the arrangement out

Section 150(1.31) lists situations where the deemed-trust rule does not apply. Check these before assuming your corporation is caught:

• 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.
• Property held solely for a partnership by its partners, where a partnership return is filed.
• Property a court order requires the legal owner to hold.
• Canadian resource property held for qualifying corporations or partnerships.
• Government funds held for persons described in s. 149(1) who are the legal owners.
• Property held by a registered securities dealer or regulated trust company that issues an information return to all beneficiaries.

The principal residence exceptions are written for related individuals and for an individual holding property for a spouse or common-law partner, so they are unlikely to help a corporate nominee.

Timing and what gets filed

The first returns are therefore for the 2026 year and are due 90 days after year-end, which is March 31, 2027 for a December 31, 2026 year-end. The legislation behind these rules received royal assent on March 26, 2026.

On a T3 for a reportable bare trust, CRA says only the fields marked need completing and the rest can be left blank. If there is no governing document name, you list the beneficial owner's legal name followed by the word "Trust". Income, capital gains and capital losses from the property should be reported on the beneficial owner's tax return, not on the trustee's T3.

A reportable bare trust that is also a listed trust is not required to file unless it is requested to file. Schedule 15 asks for the name, address, date of birth (for individuals), country of residence and tax identification number of all trustees, settlors, beneficiaries and controlling persons. Missing information, such as tax identification numbers, leaves the schedule incomplete and the filing obligation unmet.

Penalties, underused housing tax and next steps

If a trust has no unpaid tax on the due date, the alternative late-filing 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. Where tax is unpaid, the penalty is 5% of it plus 1% for each full month late, to a maximum of 12 months. A person 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.

Separately, for the underused housing tax, a corporation owning residential property as trustee of a bare trust has to file if it is an affected owner. That filing and payment apply to the 2022, 2023 and 2024 calendar years, but not to 2025 and later years.

• List each property held through a nominee or holding corporation and who really controls it.
• Gather the nomination, agency or similar agreements.
• Check whether any s. 150(1.31) exception fits.
• Collect names, addresses, dates of birth and tax identification numbers for everyone Schedule 15 would cover.
• Note the 2026 year-end and the March 31, 2027 deadline if your year-end is December 31.
• Confirm the analysis with a lawyer or accountant before the first filing.

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