Real Trusts still have to file

On March 28, 2024, the Canada Revenue Agency announced that so-called “bare trusts” would not have to file a T3 Income Tax and Information Return.  This is welcome news.  However, it comes very late in the process.  The announcement was made on the day before the start of the Easter long weekend and a more four calendar days before the filing due date for most trusts.

Most so-called bare trusts are actually agency arrangements and not trusts at all.  Notwithstanding this legal distinction, many taxpayers and tax preparers were in the process of filing returns anyway (even if only to be on the safe side).

Perhaps the CRA will take the time to learn more about what a bare trust actually is.  A bare trust usually arises at the tail end of a real trust, between the time that property becomes distributable and the time that the property is actually distributed.  In other words, one must actually have a trust before one can have a bare trust.  An agency arrangement is not a trust, as the principal does not give up control over the asset while the asset is held by the agent.

For the formal announcement, see https://www.canada.ca/en/revenue-agency/news/newsroom/tax-tips/tax-tips-2024/bare-trusts-exempt-from-trust-reporting-requirements-2023.html.

The March 28 announcement does not affect real trusts.  Real trusts still have to file T3 returns.,



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