A Bare Trust is a situation where one person holds title to an asset for the benefit of someone else, who gives instructions to the trustee. This differs from a typical trust, where the trustee controls the assets.

Have you added your name to the legal title of your child’s new home to help them obtain a mortgage?

Or have you opened an “in trust” bank or brokerage account for your adult child to help with estate planning?

What should you do if you have a Bare Trust? Speak to your accountant. If you’re unsure, speak to your accountant.

Bare Trusts must be reported to the Canada Revenue Agency (CRA) by April 2nd, as the original deadline of March 30th falls on a weekend, depending on the type of trust. Failure to report can result in penalties of up to 5% of the asset value. This reporting requirement helps the CRA identify the true ownership of assets, especially in real estate.

If the value of your asset or investment account is below $50,000, you don’t need to report it.

When filing, the trustee must provide the names, addresses, dates of birth, and Social Insurance Numbers of both the trustee and the beneficiary.

There’s no need to provide details about specific assets held in the trust, just the basic information about the parties involved.

While the CRA has stated they won’t assess penalties for the current year, filing is still required. It’s unclear how the CRA will use the information collected, so it’s important to stay informed and comply with the reporting requirements.

Bottom line

Make sure that if you have or even think you have a Bare Trust to inform their your accountant, as these arrangements might not be commonly known.