Do You Have a Bare Trust?
A Simple Questionnaire to Help Determine Whether You May Have a 2026 T3 Filing Requirement
Many Canadians are surprised to learn that they may be involved in a bare trust arrangement without realizing it.
With trust reporting rules continuing to evolve, certain bare trusts may be required to file a T3 Trust Income Tax and Information Return for taxation years ending on or after December 31, 2026. As a result, individuals who may never have filed a trust return before should begin assessing their situation now.
The challenge is that bare trusts are often created informally through family arrangements, real estate ownership structures, nominee relationships, or business transactions. In many cases, individuals do not consider themselves trustees and may not realize that a filing obligation exists.
To help identify potential issues, we have prepared the following questionnaire.
What Is a Bare Trust?
In general, a bare trust exists when one person holds legal ownership of property while another person has the beneficial ownership and receives the benefits of that property. The bare trustee has little or no independent authority and generally acts only on the instructions of the beneficial owner.
Examples may include:
- A parent holding property for an adult child.
- A child being added to title for administrative reasons.
- Nominee shareholder arrangements.
- One person holding legal title to property on behalf of another.
- Certain joint ownership arrangements where legal and beneficial ownership differ.
Bare Trust Self-Assessment Questionnaire
Ownership and Beneficial Interest
- Is any property registered in your name while someone else is the true economic owner?
- Do you hold legal title to property solely for another person’s benefit?
- Does another person receive all income, gains, or financial benefits associated with the property?
- Would you transfer the property immediately if instructed by the other person?
- Do you have little or no authority to make decisions about the property?
Control and Decision Making
- Do you require another person’s approval before selling, transferring, refinancing, or otherwise dealing with the property?
- Does another person decide how the property is managed?
- Are you acting primarily as a nominee or agent?
- Do you lack discretion over investment or management decisions?
- Are your responsibilities primarily administrative?
Real Estate Ownership
- Is your name on title to a property that was paid for by someone else?
- Are you on title primarily to assist a family member with financing or mortgage qualification?
- Are you listed on title but do not participate in income, expenses, or appreciation?
- Is a family member the beneficial owner while you hold legal title?
- Do land registry records show you as owner even though someone else is treated as the actual owner?
Bank Accounts and Investments
- Are you the legal holder of an account that actually belongs to someone else?
- Do you manage investments solely according to another person’s instructions?
- Were you added to an account for convenience only?
- Do you hold investments on behalf of a child, parent, relative, or business associate?
Corporate and Business Arrangements
- Are shares registered in your name for another person’s benefit?
- Is there a nominee shareholder agreement in place?
- Do you hold property on behalf of a partnership, joint venture, or related party?
- Have you signed any declaration of trust, nominee agreement, or agency agreement?
Documentation and Professional Advice
- Is there written documentation describing you as a trustee, nominee, agent, or legal owner?
- Has your lawyer, accountant, lender, or financial institution referred to the arrangement as a trust or nominee arrangement?
- Do records identify someone else as the beneficial owner?
Possible Exceptions
- Are all legal owners also beneficial owners?
- Is the property a qualifying family principal residence?
- Is this simply a normal co-ownership arrangement where legal ownership and beneficial ownership match?
- Have you received professional advice confirming that the arrangement is exempt from the trust reporting rules?
What Do Your Answers Mean?
Likely Low Risk
If you answered “No” to most or all of the questions above and the legal owners and beneficial owners are the same individuals, a bare trust is less likely to exist.
Further Review Recommended
If you answered “Yes” to several questions, particularly those relating to:
- Holding legal title for someone else,
- Acting under another person’s instructions, or
- Having no independent authority over property,
you may have a bare trust arrangement that requires further review
Don’t Wait Until Filing Season
One of the biggest challenges with trust filings is gathering the required information. By the time filing deadlines arrive, many taxpayers are scrambling to locate agreements, ownership records, beneficiary information, and supporting documentation.
The penalties for failing to file required trust returns can be significant, making proactive planning especially important.
How We Can Help
Determining whether a bare trust exists is not always straightforward. Family real estate arrangements, joint ownership structures, nominee corporations, and intergenerational planning strategies can create reporting obligations that are easy to overlook.
Our team can help you:
- Determine whether a bare trust exists
- Identify available exceptions and exemptions
- Review ownership arrangements and documentation
- Prepare and file required T3 Trust Returns
- Minimize the risk of penalties and CRA compliance issues
- Answer your questions in plain language
Have Questions?
If you have answered “Yes” to any of the questions above, or if you are unsure whether a filing is required, contact your FK LLP advisor. We can review your situation, explain your obligations, and handle the filing process from start to finish so you can focus on what matters most.
A short consultation today could save significant time, stress, and potential penalties later.
