The Canada Revenue Agency is getting out ahead of the confusion stoked by an eleventh-hour reversal on bare trust tax reporting requirements last year.
The CRA said Tuesday that it is extending an exemption to the reporting of bare trusts for the 2024 tax year.
That means that, unless specifically requested by the CRA, Canadians with bare trusts won’t need to file T3 or Schedule 15 documentation when they complete their return next spring for the current tax year.
Bare trust arrangements can arise when someone legally owns an asset but the beneficiary is someone else and the trustee has no say in how or when the income or assets are distributed.
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Some common examples include a joint banking account between an adult and their older parent, a grandparent opening a bank account for a grandchild, or a parent co-signing a mortgage with their child.
While bare trusts are not new, the CRA had introduced new rules for the 2023 tax year requiring certain reporting for anyone involved in such an arrangement.
The new administrative burden saw many Canadians seek the help of professionals to handle their returns, only to be told mere days before the filing deadline that the requirements were being waived for that year.
The CRA said at the time that the decision was made “in recognition that the new reporting requirements for bare trusts have had an unintended impact on Canadians.”
The about-face on bare trusts earned the ire of many Canadian taxpayers as well as elected officials.
In July, the Canadian taxpayers’ ombudsman announced a probe into the CRA’s handling of the bare trust reporting requirements.
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