Tax Reporting For Bare Trusts:  New 2023

Dear Clients and web browsers:  MEMO on the News about tax reporting for bare trustees and other trustees.

UPDATE. ONE YEAR DELAY Announced March 28, 2024. This issue is not going away, but itsimplementation and the obligation to report have been delayed by one year. Perhaps the plan willbe better adapted and more clearly explained for the coming year. Every bare trust should beinvolved, unless it was created in 2024. It looks like the trusts created in 2024 will not have to reportuntil 2025, unless they have first year end prior to or on December 30, 2024.

We will have to see how the consultation process goes between the tax adviser industry , the citizens,elected officials and the people at Revenue Canada.

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Tax Reporting For Bare Trusts: new 2023

Dear Clients and web browsers: MEMO on the News about tax reporting for bare trustees and othertrustees.There are brand new reporting obligations imposed on trustees this year. They do not necessarilycreate a new tax, but they require trustees to report with an annual T-3 return, where no such reportwas required previously.So that the tax payers will take this reporting reasonability seriously, huge, even crippling penalties aresuggested. The new issue is “a trustee.” For example, it now appears that you put your name on yourelderly parents house with your surviving parents then you are a bare trustee with a duty to report.Further, if you allowed your name to be added to you children’s deed so they could get a mortgage theyotherwise would not qualify for (or for whatever reason) you too are a trustee and required to report.All tax returns for trusts are to be done annually and on time. Usually March 31, for a trust. The otheroption is to accept that you are a beneficial owner, and not just a trustee, but then you might exposeyour portion of the house to capital gains tax. This might be less that the penalties but I doubt it. Not sobig a problem for the parent trustee owners in the above scenarios, especially if they are not jointtenants and have managed their share down to a small fraction. But for kids on the parent’s deed,filing the tax return, that is an annual T-3 with a schedule 15, after you get the bare trust a tax filingnumber, is strongly recommendedAllan Lantheir, a writer for the Financial Post calls it “ a disaster.’ He anticipates, correctly, I am sure,that many of persons standing in a trustee position will miss their filing. Especially bare trustees justhelping out the family, now, when it often takes two generation to buy a house.

See his article from March 14, 2023 and see the CRA web page (both links below) addressing the filingrequirements. T-3 and form 15 required each year. Start right now to get a Taxpayer number for thebare trust, and collect up the names and SIN numbers of the beneficiaries of the trust.

In the CRA article you will note a number of exceptions and definitions beyond the scope of this memo.

Financial Post

CRA memo is not legal advice. Your situation may be different, but not filing is not a good option. A fullinterview with your lawyer or you accountant may be required.

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