Who Is the Beneficial Owner in a Bare Trust? Canada Guide

You may be on title to a property or account that really belongs to someone else. Or you may have put your own money into something that another person holds in their name. Either way, CRA's trust forms ask you to name people by role, and the labels are not always obvious.

This article explains the three roles in plain words, how they usually line up in a bare trust, and what information CRA's schedule asks for. It is general information, not advice on your own arrangement.

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

The three roles in plain words

The Income Tax Act does not define a bare trust. CRA uses the term for an arrangement where the trustee acts as agent for all the beneficiaries. The roles below are how CRA's guidance describes the people involved.

How to tell the trustee from the beneficial owner

A trustee generally qualifies as an agent, and so as a bare trustee, when the trustee has no significant powers, cannot act without the beneficiary's instructions, and only holds legal title. If that describes your position, you are probably the legal owner and the person giving the instructions is probably the beneficial owner.

Whether a bare trust actually exists is a question of fact. These plain questions help you think it through:

• Who decides whether the property is sold, borrowed against or moved?
• Who is meant to receive the benefit of the property or the income it earns?
• Who contributed the money or property in the first place?
• Could the person on title act without anyone else's say-so?

The settlor is the person who set up the trust by contributing property. In a simple arrangement that may be the same person as the beneficial owner. In others, for example where one person funds an asset that another person is meant to own, they can be different people.

When an arrangement is caught and when it is not

For reporting, section 150(1.3) of the Income Tax Act treats an express trust as including 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 a trustee and the users or beneficiaries are deemed beneficiaries. CRA calls this a reportable bare trust, and it can include an arrangement that would not otherwise be a trust under the Act.

There are exceptions. The deemed-trust rule does not apply where 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 the use and benefit of each of them. It also does not apply where the legal owners are related individuals and the property is real property that would be the principal residence of one or more of them, which CRA says covers a parent on title to help a child obtain a mortgage. Related persons include those connected by blood relationship, marriage, common-law partnership or adoption.

An individual who holds real property for a spouse or common-law partner is also excluded if it would be the owner's principal residence. Further exclusions cover 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, and certain other cases.

What CRA asks for, and when

Schedule 15 requests specified information on all trustees, settlors, beneficiaries and controlling persons: name, address, date of birth for individuals, country of residence and a tax identification number. Beneficiaries whose identity cannot be determined with reasonable effort may be described in Part C. Missing information such as tax identification numbers leaves the schedule incomplete, and CRA says the trust has then not met its filing obligations.

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

On timing, CRA does not expect bare trusts to file a T3 or Schedule 15 for taxation years ending in 2025. Bare trusts are not subject to the reporting rules for years ending on or after December 31, 2024 and before December 31, 2026. Reportable bare trusts are caught for years ending on or after December 31, 2026, so the first returns are for 2026, due March 31, 2027 for a December 31 year-end.

What to do next

• Write down who holds legal title and who is meant to benefit.
• Note who contributed the property and when.
• Check whether one of the exceptions above fits your situation.
• Collect names, addresses, dates of birth, countries of residence and SINs for everyone involved.
• Make sure the beneficial owner knows the income and gains go on their own return.
• If the roles are unclear, ask a lawyer or accountant to review the arrangement before a filing is due.

Frequently asked questions