Bare Trust Reporting Returns for 2026: Could Your Ownership Arrangement Require a T3 Return?

For years, many Canadians have used arrangements where one person is named as the legal owner of property even though someone else is the true economic or beneficial owner. These arrangements can arise for perfectly ordinary reasons. A parent may be added to the title of a child’s home to assist with financing. An adult child may be added to a parent’s bank or investment account for estate-planning or administrative purposes. A corporation may hold legal title to real estate on behalf of another corporation, partnership or group of investors. These types of arrangements are often referred to as bare trusts.

Beginning with taxation years ending on or after December 31, 2026, certain bare trusts will be subject to Canada’s enhanced trust-reporting rules. A reportable bare trust may be required to file a T3 Trust Income Tax and Information Return together with Schedule 15, Beneficial Ownership Information of a Trust. Importantly, not every arrangement involving different legal and beneficial owners will result in a filing requirement. The legislation contains several significant exceptions. Determining whether reporting is required will depend on the particular ownership arrangement, the reason it exists, the property involved and the relationship between the parties.

What is a Bare Trust?

In a typical bare trust arrangement, one person holds legal ownership of property but holds that property for the use or benefit of someone else. The legal owner generally does not have meaningful independent control over the property. Instead, the legal owner acts essentially as an agent for the beneficial owner.

The new reporting provision is aimed at an express trust where:

• one or more persons have legal ownership of property held for the use or benefit of another person or partnership; and
• the legal owner can reasonably be considered to act as agent for the person or partnership receiving that use or benefit.

For reporting purposes, the legal owner is treated as the trustee and the person receiving the use or benefit of the property is treated as the beneficiary.

This does not necessarily mean the bare trust itself pays tax on the income from the property. The reporting regime is principally concerned with identifying the parties to the ownership arrangement. CRA‘s guidance continues to provide that the income, gains and losses of bare-trust property are generally reported by the beneficial owner.

There Does Not Necessarily Have to be a Written “Bare Trust Agreement”

One of the more difficult aspects of the new rules is determining whether an express trust exists in the first place. It would be a mistake to assume that there is no trust simply because nobody signed a document entitled “Bare Trust Agreement.” CRA notes that trust terms may be written or oral and that the existence of a trust relationship can sometimes be determined from the surrounding circumstances, including what the parties intended, what they agreed to and how they actually dealt with the property.

There must nevertheless be an intentional trust relationship under the applicable law. The legislation does not simply deem every situation where legal title and economic ownership differ to be a reportable bare trust. Finance Canada describes the new rule as applying to arrangements that would normally constitute bare trusts provided they are also express trusts under applicable law. As a result, the absence of a formal agreement does not automatically resolve the issue. The facts and available documentation need to be considered carefully.

What Types of Arrangements Should You Review?

A number of common situations may warrant review. For example, consider a mother who adds her adult son to her bank and investment accounts so he can assist her as she gets older. The mother continues to own all of the funds beneficially, and the son has no right to use the money for himself. Depending on how the arrangement was established, the son may be holding legal ownership solely for his mother’s benefit. Similarly, family members are sometimes placed on title to real estate without acquiring any economic ownership. A parent may assist a child in obtaining a mortgage, or an adult child may be placed on an elderly parent’s property for estate-planning purposes.

Bare trusts are also common in business and real-estate structures. A nominee corporation may hold registered title to real estate while another corporation, partnership or group of investors owns the property beneficially. Property may also be registered in the name of an individual partner while it is actually held for a partnership. These arrangements should not automatically be assumed to require a T3 return. Instead, they should be identified and then tested against the new rules.

There are Important Exceptions

The legislation deliberately excludes a number of common arrangements from the new bare-trust reporting rule. One significant exception applies where everyone who has the use or benefit of the property is also a legal owner, and every legal owner is also a beneficiary. Finance Canada gives a joint family bank account as an example of the type of arrangement this exception is intended to address.

There are also important exceptions relating to family homes. For example, an arrangement may be excluded where related individuals are legal owners of a property that would qualify as the principal residence of one or more of them. Finance specifically identifies a parent being placed on title to help a child obtain a mortgage as an example. There is a separate exception dealing with certain situations where a home is held for the use or benefit of a spouse or common-law partner.

Certain partnership arrangements are also excluded where property is held solely for a partnership, each legal owner is a partner, and the required partnership information reporting is otherwise being completed. Other specialized exceptions apply to court-ordered holdings, certain resource-property arrangements, particular tax-exempt entities and certain regulated financial institutions.

Even if none of these bare-trust-specific exceptions applies, a second set of exemptions may still eliminate the annual reporting requirement. For example, a trust may qualify for an exemption where the total fair market value of all of its property does not exceed $50,000 throughout the year. There is also a broader $250,000 exemption in certain situations involving individual trustees, related individual beneficiaries and specified types of property such as cash, qualifying GICs, publicly traded investments and certain other assets. The $250,000 threshold applies to the total property of the particular trust, not separately to each asset. The interaction of these different exemptions is one reason a bare-trust filing requirement should not be determined simply by looking at who appears on legal title.

Why This Matters for 2026

Bare trusts were not required to file under these enhanced rules for taxation years ending in 2024 or 2025. That changes for certain bare trusts for taxation years ending on or after December 31, 2026.

For a calendar-year trust, a required T3 return is generally due within 90 days after year-end, meaning the 2026 filing will generally be due by March 31, 2027.

The difficulty is that many affected individuals may not think of themselves as having a “trust.” The arrangement may have been established years ago for banking convenience, financing, estate planning or as part of a business transaction.

That is why we recommend identifying potential bare-trust arrangements before the 2026 filing season rather than waiting until a T3 return is due.

Contact Edelkoort Smethurst CPAs LLP in Burlington to Help With a Bare Trust Reporting Assessment

Our firm offers a bare trust reporting assessment for individuals and businesses that are unsure whether an ownership arrangement is subject to the new reporting requirements. As part of that review, we can examine the legal and beneficial ownership of the property, the purpose and history of the arrangement, available trust, nominee or ownership documentation, and the relationship between the parties. We can then assess whether the arrangement is an express bare trust for reporting purposes, whether one of the specific statutory exceptions applies, whether one of the broader trust-reporting exemptions is available, and ultimately whether a 2026 T3 return and Schedule 15 are required.

Situations worth having reviewed include cases where your name appears on property, a bank account or an investment account that you do not actually own for your own benefit, or where a corporation or individual holds legal title to property for another person, corporation or partnership. If you have an arrangement where legal ownership and beneficial ownership may be different, contact us online or by telephone at 905-517-2297 to have the arrangement reviewed before the 2026 trust filing deadline.

This article provides general information only. Whether an arrangement constitutes a trust and whether a filing requirement exists depends on the particular facts, applicable private law and the Income Tax Act.