- For taxation years ending in 2025, the CRA does not expect bare trusts to file a T3 or Schedule 15, and the first returns are for the 2026 year.
- A late bare trust return usually draws the daily penalty of $25 a day, with a minimum of $100 and a maximum of $2,500, because there is usually no tax owing.
- For a non-listed trust, a knowingly false statement, gross negligence or a failure to file can bring a penalty of the greater of $2,500 and 5% of the highest fair market value of the trust property, and failing to give a tax identification number can bring a $100 penalty per failure.
You may have heard that bare trusts now have to file a return with the CRA, and you may be worried that you missed a deadline. Before looking at penalties, it helps to confirm whether a filing was actually due for the year in question.
This article explains when a bare trust return is required, how the late-filing penalties are worked out, and what generally helps when a return is late. It is general information, not advice on your own arrangement.
This article covers Canadian federal tax law, which applies in every province.
Was a bare trust return actually due?
A bare trust is an arrangement where the trustee is only an agent who holds legal title, while the beneficiary is the real owner. For taxation years ending in 2025, the CRA does not expect bare trusts to file a T3 return, including Schedule 15.
The same relief applies to taxation years ending on or after December 31, 2024 and before December 31, 2026. Reportable bare trusts become subject to the trust reporting rules for taxation years ending on or after December 31, 2026, so the first returns are for the 2026 year. For a December 31, 2026 year-end, that return is due March 31, 2027.
In short, if your concern is a 2024 or 2025 year, there may be nothing late. A bare trust that is not required to file for 2025 has nothing to file. Whether your arrangement is a bare trust at all is a question of fact.
How the late-filing penalty is calculated
The T3 return is due no later than 90 days after the trust's year-end. If it or the Schedule 15 information is filed late, which penalty applies depends mainly on whether there is unpaid tax.
| Situation | Penalty |
|---|---|
| Unpaid tax, usual case | 5% of the unpaid tax when the return was due, plus 1% of that tax for each full month late, to a maximum of 12 months |
| Unpaid tax, repeat late filer after a CRA demand | May be 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 $25 a day penalty is the likely one. The percentage penalties apply to unpaid tax, so they matter only if tax was actually owing.
Other penalties that can apply
Late filing is not the only risk. 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.
Identification numbers matter too. A person who fails to give their tax identification number, such as a SIN, to the trustee may be liable to a $100 penalty for each failure. Schedule 15 asks for the name, address, date of birth, country of residence and tax identification number of all trustees, settlors, beneficiaries and controlling persons.
Missing specified information leaves the schedule incomplete, and the CRA says the trust has then not met its filing obligations.
Ways to limit the damage
Because the penalties build with time, either by the month or by the day, filing a complete return sooner is generally better than waiting. Beyond that, these points are worth checking:
- Confirm the year. The relief covers taxation years ending on or after December 31, 2024 and before December 31, 2026.
- Check the exceptions. The deemed-trust rule does not apply where every beneficiary is also a legal owner and no legal owner is a non-beneficiary, where related individuals hold real property that would be the principal residence of one or more of them, or where an individual holds real property for a spouse or common-law partner and it would be the owner's principal residence. Court-ordered holdings and some other arrangements are also excluded.
- Check whether the trust is also a listed trust. A reportable bare trust that is a listed trust is not required to file unless requested.
- Gather the Schedule 15 details for everyone involved, including tax identification numbers. Beneficiaries whose identity cannot be determined with reasonable effort may be described in Part C.
- Ask a lawyer or accountant whether any relief from penalties is available in your situation.
What to do next
- Write down the property, who holds legal title, and who is the real owner.
- List the year-ends in question and compare them with the 2026 start date.
- Collect names, addresses, birth dates and SINs for all parties.
- Check whether any exception applies before assuming you must file.
- Speak with a lawyer or accountant before filing late or responding to a CRA letter.
The CRA says it cannot give definitive determinations on whether a trust exists, and suggests consulting a legal advisor if unsure.
Frequently asked questions
Do I owe a penalty for not filing a bare trust return for 2025?
For taxation years ending in 2025, the CRA does not expect bare trusts to file a T3 or Schedule 15. Reportable bare trusts are caught for years ending on or after December 31, 2026. Whether your arrangement is a bare trust is a question of fact worth confirming.
What is the most likely penalty for a late bare trust return?
A bare trust usually has no tax payable, so the likely penalty is $25 a day, with a minimum of $100 and a maximum of $2,500. The percentage penalties apply to unpaid tax.
Can the penalty be higher than that?
Yes, in some cases. A knowing or grossly negligent false statement or failure to file for a non-listed trust can lead to the greater of $2,500 and 5% of the highest fair market value of the trust property.
Who pays tax on a bare trust's income?
The CRA says all income, capital gains and capital losses from a reportable bare trust's property should be reported on the beneficial owner's tax return, not on the trust's T3.
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
- Justice Laws – Income Tax Act s. 150 — Justice Laws (federal)
- 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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