On October 29 of this year, the Canada Revenue Agency (CRA) announced that it will not require bare trusts to file T3 Income Tax and Information Returns (T3 returns) for the 2024 tax year. This exemption will include the Schedule 15 Beneficial Ownership Information of a Trust. This exemption is an extension of what was in place for the 2023 tax year. However, the CRA reserves the right to, upon request, require these filings from the trust.
CRA Extends T3 Exemptions for Bare Trusts in 2024
A bare trust for the purpose of the Income Tax Act (ITA) is an arrangement where the trustee is “bare” of powers with regard to his administration of the trust. This means that the trustee has no power to manage the trust, outside of what he is directed to do by the beneficiary or beneficiaries of such a trust. In such an arrangement the trustee’s role is to hold the legal title to the asset(s) while the beneficiary or beneficiaries direct the trustee as to its management. The cross-border living trusts that we assist clients in setting up, fit this categorization of bare trust and should be included in the above stated reporting exemption.
Proposed Amendments to Expand Trust Reporting Exemptions
Additionally, there are proposed amendments to the ITA that could further expand the number of trusts exempt from the reporting rules. These amendments propose to exempt trusts with a fair market value that does not surpass $50,000 or trusts where trustees and beneficiaries are individuals, where the beneficiaries are related to each trustee, where the fair market value of the trust does not exceed $250,000 and where such a trust only holds certain assets like money, GICs (Guaranteed Investment Certificates) and publicly traded shares.
However, these proposed amendments do not as of yet have an official enactment date. What is certain, is the extension of the exemption of reporting a T3 return and Schedule 15 in the 2024 tax year for bare trusts.
Expert Guidance for Your Tax Obligations
If you wish to learn more about your tax obligations, we invite you to consult with one of our professionals at Levy Salis LLP to learn what your obligations are. Our team will offer you its expertise in providing a comprehensive analysis and assist you in determining and implementing the best strategy for you.
The comments offered in this article are meant to be general in nature and are not intended to provide legal advice regarding any individual situation. Before taking any action involving your individual situation, you should seek legal advice to ensure it is appropriate for your circumstances.
About the author
Shlomi Steve Levy is a Partner of Levy Salis LLP and is a member of the Quebec Bar, the Law Society of Ontario (L3), the Society of Trust and Estate Practitioners, and the Canadian Bar Association.
