Bare Trust: CRA’s latest T3 reporting requirement
Are you someone who:
- Has been added as a joint member onto an investment account or a bank account valued over $50,000.00?
- Holds the legal title of a property?
- Signed on behalf of your kid’s mortgage?
If you answered “Yes” to any of the above questions, you are classified as a bare trustee.
The Canadian Government has recently introduced a new reporting requirement for all trust holders or more specifically, Bare Trust holders. This new requirement enforces bare trust holders to file a T3 trust return along with the Schedule 15 form by March 31st, 2024, for the 2023 calendar year. Failure to file your T3 return on time can result in a penalty of $2,500.00.
What is it?
The term “bare trust” is described as a trust arrangement in which a trustee/operator is given the title to act as a representative on behalf of all the beneficiaries in the trust. From being added as a joint member to an investment account or a bank account, to holding the legal title of a property under your corporation on behalf of a beneficial owner, to co-signing on your child’s mortgage, you fall under the bare trustee/operator umbrella and must file a T3 return along with a Schedule 15 form by the deadline.
Who needs to file it?
In addition to the examples stated above, some common scenarios of arrangements that are considered trusts and fall under the new T3 filing rules are:
- Joint Venture – The joint venture operator would be considered a Bare Trustee and is required to submit the T3 return form.
- Partnerships – The general partner would be the one to hold the legal title to the land in a bare trust agreement, and the partners would be disclosed on the Schedule 15 form as beneficial owners.
One key exemption for all joint bank account holders is; if a bank account is valued at less than $50,000.00 throughout the year, you are exempt from filing a T3 trust return. Now, one might have less than $50,000.00 in their bank throughout the year, but if you generate over $500.00 in interest income, you are disqualified from the exemption, causing you to file your T3 trust return.
All of which, are very common applications of Bare Trusts and if you fit the criteria for any one of the above, then you must file a T3 trust return along with a Schedule 15 form by March 31st, 2024.
How do you file your T3 trust return & Schedule 15 form?
All bare trustees must first register their Trust Account Number on their My CRA Account under the “more services” tab. Only once this is completed, the trustee is allowed to access their T3 form and file it accordingly.
For step-by-step instructions on how to file your T3 return, please refer to the link below:
When do you need to file the T3 return to avoid penalties?
Canada’s Revenue Agency announced the deadline for T3 returns to be no later than March 31st, 2024. Failure to do so can result in severe penalties.
What are the penalties?
The base penalty is $25 each day that you’re late to file the T3 form. A minimum penalty of $100.00 and a maximum penalty of $2,500.00.
An additional penalty of 5% of the maximum value of property held during the relevant year by the trust with a minimum of $2,500.00, if you fail to file your Trust Return while knowing the due date.
Simply put, DON’T IGNORE IT!!!
For all inquiries/questions regarding the Bare Trust T3 return, please call Senathi & Associates at (416) 479-0600 or email us at info@gtacpa.ca, and we’d be more than happy to be of assistance!