The enhanced trust reporting rules came out in 2023, but after repeated rule changes, most bare trusts were not required to file returns for 2023, 2024 and 2025.

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Starting with the 2026 tax year, most bare trusts must file a T3 return and Schedule 15 by March 31 of the following year.

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Penalty for Not Filing

If a bare trust does not file on time, a late-filing penalty of up to $2,500 plus interest applies per tax year. If a bare trust fails to file knowingly or under circumstances amounting to gross negligence, there can be a further penalty of the greater of $2,500 and 5% of the fair market value of the property held by the trust.

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What is a Bare Trust

There is no precise definition. One common example is if you have transferred beneficial ownership of property, but title is still registered in the name of the transferor(s). Another example can be where a person is added to a bank account for convenience where such person is not a beneficial owner.

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What to Do

If you might have a bare trust, inform your accountant promptly so they can assist you. If they or you then need legal advice, please contact Chris Ness of our tax law group.

For further reference, see: https://www.canada.ca/en/revenue-agency/services/tax/trust-administrators/t3-return/enhanced-reporting-rules-trusts-bare-trusts-faq.html