Real Estate Held in Trust for Another: Reporting Duties in Canada

You may be on title to a property that someone else really owns. A parent might be on a child's mortgage, a friend might hold a house for a buyer, or a person might hold title for a lender or relative. Family trust and nominee arrangements are common, and many people do not think of them as trusts at all.

This article explains how the CRA looks at that kind of arrangement, which situations are excluded, and what filing and penalty rules may follow. Whether you have a duty depends on the facts, so use this to prepare questions rather than to decide.

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

When holding title for someone else becomes a reporting issue

The CRA describes a reportable bare trust as an express trust where a legal owner can reasonably be considered to act as agent for the beneficiaries. This includes an arrangement that would not otherwise be considered a trust under the Act.

Under s. 150(1.3), 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.

In practice, signs of an agent role include having no significant powers, being unable to act without the real owner's instructions, and holding only legal title.

Situations that are excluded

The deemed-trust rule does not apply in a number of cases. Common ones include:

• Related individuals who are legal owners of real property that would be the principal residence of one or more of them; the CRA says this covers a parent on title so a child can get a mortgage.
• An individual holding real property for a spouse or common-law partner where it would be the owner's principal residence.
• Cases where every beneficiary is also a legal owner and no legal owner is a non-beneficiary, such as a family joint bank account.
• Property a court order requires the legal owner to hold, and property held solely for a partnership by its partners where a partnership return is filed.
• Property held by a registered securities dealer or regulated trust company that issues an information return to all beneficiaries.

For the principal-residence exclusion, related persons include those connected by blood relationship, marriage, common-law partnership or adoption. If you are holding title for a friend or a lender, that exclusion would not obviously fit, so the arrangement is worth reviewing.

What you may have to file, and when

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

On a T3 for a reportable bare trust, the CRA says only the fields marked with a check mark need completing. If the trust has no governing document name, the CRA says to list the beneficial owner's legal name followed by the word Trust.

Schedule 15 requests the name, address, date of birth for individuals, country of residence and a tax identification number for trustees, settlors, beneficiaries and controlling persons. A reportable bare trust that is also a listed trust is not required to file unless it is requested to file.

On tax itself, the CRA says income, capital gains and capital losses from the property should be reported on the beneficial owner's return, not on the trust's T3.

Penalties to be aware of

If the CRA issued a demand to file and already assessed a late-filing penalty in any of the three preceding years, the penalty may be higher, at 10% of the unpaid tax plus 2% a month, to a maximum of 20 months.

What to do next

The CRA says it cannot make definitive determinations on whether a trust exists, that the question is one of fact, and that you can consult a legal advisor if unsure. Reporting rules also do not require disclosure of information covered by solicitor-client privilege.

• List every property where your name is on title but someone else pays for or uses it.
• Find any written agreement, mortgage document or note about who really owns it.
• Check each against the exclusions, such as the principal residence cases.
• Collect names, addresses, dates of birth and SINs or other tax numbers of the people involved.
• Speak with a lawyer or accountant before the first possible deadline of March 31, 2027.

Frequently asked questions