Bare trusts in Canada: the arrangement and the filing question

Very few filing requirements have been introduced, relieved, legislated away and then reinstated in narrower form inside four years. Bare trust reporting has. The arrangement itself is old and ordinary; the reporting question attached to it has been anything but settled. This guide separates the two.

What a bare trust actually is

The term is not defined in the Income Tax Act. Subsection 104(1) provides that a bare trust for income tax purposes is a trust arrangement under which the trustee can reasonably be considered to act as agent for all the beneficiaries with respect to all dealings with all of the trust's property.

The CRA describes the practical test in terms of what the trustee cannot do: a trustee acts as agent when they have no significant powers or responsibilities, can take no action without instructions from the beneficiary, and whose only function is to hold legal title.

That is what separates a bare trust from an ordinary one. In a family trust, the trustee exercises real discretion and owes fiduciary duties in exercising it. In a bare trust the trustee is a nameplate: legal title sits in one place, while possession, use, risk and control — the real attributes of ownership — sit in another.

Why owners hold property this way

Bare trust arrangements are common, and most exist for reasons unrelated to tax. The CRA's own example is a property developer establishing a bare trust to hold registered title for privacy reasons while retaining beneficial ownership. Other everyday patterns include:

• A parent added to a child's title, or a child to a parent's, to simplify administration — often without either intending a gift.
• A corporation holding title to land that a related operating company actually uses and pays for.
• A nominee company holding title for several co-venturers, or a person named on an account purely for access.

The filing question, and why it keeps moving

Here is the sequence, stated carefully, because the details matter more than the summary. Bare trusts were brought within the enhanced trust reporting rules applying to taxation years ending on or after December 31, 2023 — which would have required a T3 return with Schedule 15 for an enormous number of ordinary arrangements.

• 2023 taxation year. In a tax tip issued March 28, 2024, in recognition (in the CRA's words) that the rules had an unintended impact on Canadians, the CRA announced it would not require bare trusts to file a T3 return, including Schedule 15, for 2023 unless it made a direct request for those filings.
• 2024 and 2025 taxation years. Bare trusts are not subject to the trust reporting rules and are therefore not required to file a T3 return, including Schedule 15, for taxation years ending on or after December 31, 2024 and before December 31, 2026.
• Taxation years ending on or after December 31, 2026. Certain bare trusts are subject to the rules. These are described in subsection 150(1.3), subject to several exceptions in subsection 150(1.31), and the CRA refers to them as reportable bare trusts. The CRA has said further information would be added ahead of the relevant filing season.

Read that list twice before acting on it. The direction of travel is toward a narrower, legislated requirement rather than the original blanket one — but the boundary of “certain bare trusts” is set by statute, and CRA guidance on it was still being developed. Confirm the requirement for the taxation year you are filing before preparing a return or deciding not to.

What a bare trust return looks like when one is required

Where a bare trust does file, the return is largely empty. The CRA notes that not all information requested is relevant: the trust is identified using the bare trust code with its creation date, a copy of the trust document is sent in the first year of filing unless already submitted, and Schedule 15 is completed in full. The remaining parts can be left blank, because all income, capital gains and capital losses from the trust property are reported on the beneficial owner's own return.

What to do now, regardless of the year

The reporting requirement has moved. The underlying facts have not, and they are what any future filing gets built from.

• Identify the arrangements. Walk the titles, accounts and registrations in your business and family, and note anywhere legal title and beneficial ownership sit with different people.
• Get the characterisation right. Bare trust, express trust, joint ownership and agency are different things with different consequences.
• Write it down. Many bare trusts are undocumented. A short declaration recording who holds title, for whom, and since when belongs in the permanent side of your record retention system.
• Watch the adjacent regimes. The same arrangement can matter for the Underused Housing Tax, where holding property as a trustee is its own ownership capacity, and for the wider expanded T3 reporting rules if it turns out not to be a bare trust at all.

The bottom line

A bare trust is a thin arrangement with a thick compliance history. The concept is simple — one name on the paper, someone else holding the substance. What has been unstable is whether it must announce itself annually to the CRA. Relief was granted, then legislated, and a narrower requirement is scheduled to arrive. Anyone holding title for someone else should document the arrangement now, then confirm the requirement for the specific year.

This article is general information for Canadian business owners and is current as of July 2026. It is not tax, legal or accounting advice, and it does not create a client relationship. Tax rules change and your situation is unique — please speak with a CPA before acting on anything here.