While the Income Tax Act does not define what a bare trust is, the Canada Revenue Agency refers to it as “a bare trust for income tax purposes is a trust arrangement under which the trustee can reasonably by considered to act as agent for all the beneficiaries under the trust with respect to all dealings with all of the trust’s property.” Basically, when an individual holds legal title to an asset but some parts belong to someone else. Unlike other trusts which are established by a lawyer, a bare trust is an informal arrangement and is created by merely adding an individuals’ name to an account or to ownership of real estate.
Requirements for Filing Tax Returns
Bare trusts need to file T3 Trust Income Tax and Information Returns for the 2023 tax year. The CRA provides guidelines on this here. You will need to provide identification and other information along with your filing. You will need to provide a summary of tax and credits and complete all parts of the Schedule. In the past, Canadians were not required to submit these type of filings to the CRA however you will need to start doing so this tax season. The rules can be confusing, so we recommend you consult with a legal professional to ensure you do this properly.
At Verhaeghe Law Office, we can help you with all your legal needs with respect to bare trusts. Contact our Edmonton estate law lawyers today and let us put our experience to work for you. Proudly located in Edmonton, we can help clients in the Greater Edmonton Area and throughout Alberta.
