Bare trust reporting in 2027 and what to review now
By Balachandran CPA Professional Corporation
Information current as of November 2, 2026 | Estimated reading time: 7 minutes
Is your name on a bank account, investment account, or property that belongs partly or entirely to someone else? The bare trust reporting rules may affect you.
Certain bare trusts must file a T3 trust return and Schedule 15 for the 2026 tax year, generally due March 31, 2027. These rules can affect longstanding arrangements, not just those created in 2026.
Many common arrangements qualify for relief. Start by identifying who actually owns the asset, then consider the exemptions below.
What is a bare trust?
A bare trust generally separates the name on an asset from its true ownership. The legal owner, or bare trustee, holds title, while the beneficial owner is entitled to the asset and its economic benefits. The trustee generally follows the beneficial owner’s instructions with little or no independent discretion.
For example, a corporation might hold title to a rental building solely for another corporation that owns the investment.
A written “bare trust agreement” is not always necessary, and an account labelled “in trust” is not conclusive. The parties’ intentions, conduct, agreements, and provincial law matter.
When is a return required?
A reportable bare trust generally files a T3 return and Schedule 15 unless relief applies. Filing can be required even if there is no income or tax payable.
The enhanced annual reporting requirement generally concerns Canadian-resident trusts, including certain deemed-resident trusts. Cross-border arrangements require separate review.
Income and gains generally remain reportable by the beneficial owner under the applicable tax rules. An exemption from bare trust reporting does not remove those obligations.
The main exemptions and exclusions
1. Trusts in existence for less than three months
A qualifying bare trust generally does not need to file a T3 return, and Schedule 15 is not required. The CRA can still directly request a return.
This exemption includes:
A trust created less than three months before the end of its taxation year.
A trust established and terminated within less than three months.
There is no asset-value ceiling, permitted-asset restriction, or related-person requirement.
For example, a bare trust established on November 15, 2026, qualifies for this exemption for its taxation year ending December 31, 2026, even if it continues into 2027. Its filing requirements must be reviewed again for 2027; another exemption may apply.
The test is less than three months, not three months or less. The clock does not restart on January. Keep records showing when the trust began and, where applicable, ended.
2. Property worth no more than $50,000
An exemption applies where the combined fair market value of all trust property never exceeds $50,000 during the year.
There are no restrictions on asset types or requirements that the parties be related. Review market value throughout the year, rather than original cost or only the December 31 balance.
3. Certain family arrangements worth no more than $250,000
This exemption generally requires:
Every trustee to be an individual.
Every beneficiary to be an individual related to every trustee, subject to a limited extension for a qualifying deceased beneficiary’s estate.
All trust property to remain worth no more than $250,000 throughout the year.
Only permitted asset types to be held throughout the year.
Permitted assets include money, Canadian financial institution deposits, qualifying Canadian GICs, designated-stock-exchange-listed securities, mutual fund investments, certain debt obligations, personal-use property, and certain Canadian life insurance policies.
Private corporation shares, rental real estate, and private partnership interests generally do not qualify for this exemption.
“Related” has a tax meaning, extended here to include aunts, uncles, nieces, and nephews. The value limit applies to the whole trust arrangement, rather than separately to each account.
4. Qualifying principal residence arrangements
An exclusion applies where the legal owners are related individuals and the property would qualify as a principal residence of at least one legal owner for the year if designated.
A separate exclusion covers certain arrangements where an individual holds title for their spouse’s or common-law partner’s use or benefit, and the property would qualify as the titleholder’s principal residence if designated.
Neither exclusion has a $250,000 ceiling. Rental property and vacant land do not qualify simply because relatives are involved. A cottage requires review of its use and the statutory conditions.
5. Genuine joint ownership
An exclusion applies where every beneficial owner is also a legal owner at the relevant time, with no legal owners who are not beneficial owners.
A bank account genuinely owned by both spouses is a common example. There is no $250,000 limit. This differs from adding a child solely to help a parent who remains the sole beneficial owner.
Other relief covers certain partnership holdings, court-ordered property holdings, regulated securities custody arrangements, and qualifying lawyers’ trust accounts.
Eleven common situations where filing may not be required
These examples assume all stated conditions are met and the CRA has not directly requested a return.
A parent joins a child’s home title to help obtain a mortgage. All legal owners are related individuals, and the home qualifies as a principal residence of at least one legal owner for the year.
An adult child joins a parent’s home title for estate planning. The same related-owner and principal residence conditions can provide relief, regardless of the home’s value.
Spouses genuinely own their joint bank account. Both are legal and beneficial owners, with no other beneficial owners. A balance over $250,000 does not, by itself, require filing.
An adult child joins a parent’s convenience bank account. The parent owns the money, the family relationship conditions are met, and only permitted assets worth no more than $250,000 are held throughout the year.
One spouse holds title to the family home for the other partner’s use or benefit. The property would qualify as the titleholder’s principal residence for the year if designated.
A parent holds qualifying Canadian GICs for an adult child. The child is the true owner, all trustee and beneficiary conditions are met, and only permitted assets worth no more than $250,000 are held throughout the year.
Someone assists solely under a power of attorney. Assets remain in the owner’s name. Being added to an account or property title requires a separate review.
Funds are in a lawyer’s qualifying pooled trust account. The account meets applicable professional or legal requirements and is not maintained separately for particular clients. There is no $250,000 ceiling.
Funds are in a lawyer’s qualifying separate client trust account. The account meets professional or legal requirements and holds only permitted money, Canadian financial institution deposits, or qualifying Canadian GICs, worth no more than $250,000 throughout the year. This does not exempt a client’s separate trust merely because its funds pass through the lawyer’s account.
A bare trust’s property never exceeds $50,000 during the year. This exemption can apply even where the parties are unrelated or the assets would not qualify for the family exemption.
A bare trust qualifies for the less-than-three-month exemption. Asset value and family relationships do not restrict this exemption. Reassess any continuing arrangement the following year.
Arrangements worth a closer look
Identify these on your checklist:
Convenience accounts exceeding $250,000, even temporarily after a large deposit.
Rental buildings, commercial properties, or vacant land held through nominees.
Business assets held for another owner, including corporate funds in a shareholder’s personal account.
Partnership property where the specific ownership and information-reporting conditions may not be met.
Foreign nominee arrangements, which need review of the legal relationship and Canadian rules.
Accounts held “in trust” for children, which should be reviewed to determine the type of trust and whether an exemption applies.
Boats, artwork, and other valuable assets held in someone else’s name.
These are screening examples, not automatic filing requirements. A nominee corporation’s T2 return does not replace a required bare trust return.
Why review this now?
Penalties can apply even where no tax is payable. An information return penalty can be $25 per day, with a $100 minimum and $2,500 maximum.
Knowing failures, gross negligence, or failure to comply with a formal CRA demand can attract a separate penalty equal to the greater of $2,500 and 5% of the highest total fair market value of the trust’s property during the year.
Your next step: complete the identification sheet
Start with the Bare Trust Identification Sheet prepared by our friends at Cadesky Tax Seminars. We are sharing it with their permission and thank them for providing this resource.
Use the sheet alongside this article. A matching item is a reason to review the facts; it does not automatically mean a return is required.
For each arrangement, record:
Who is named on the asset and who actually owns it.
Why it was established, when it began, and when it ended, if applicable.
The asset types and their highest combined value during the year.
The exemption you believe applies, or your specific question.
If nothing applies, or an exemption clearly covers your arrangement, retain your review and revisit it when circumstances change. Unless we have separately requested a response, you do not need to contact us simply to confirm you have read this article.
If you identify a possible filing requirement or still have a specific question, email us your completed sheet and a brief explanation before requesting a call. Send supporting documents through our usual secure document-sharing process.
This helps us review your circumstances and advise you on filing requirements, next steps, and whether legal input is needed.
Checklist credit: Bare Trust Identification & Compliance Checklist, © 2026 Cadesky Tax Seminars. Shared by Balachandran CPA Professional Corporation with permission.
This article provides general information based on legislation and CRA guidance available as of November 2, 2026. The treatment of a particular arrangement depends on its facts and applicable law.
Sources
CRA — Enhanced reporting rules: Frequently asked questions, particularly questions 1.10, 2.1, 2.3.C, 2.5, and section 3.
Income Tax Act — Section 150, including the exemptions and exclusions.
Income Tax Act — Section 162 and Section 163, concerning penalties.
