Oct 24, 2026
You love your parents and, as they grow older, you want to make sure they are taken care of, which is why you agreed to add your name to their bank account. Or maybe your parents wanted to help you buy a home and they cosigned your mortgage and were added to the home’s deed of ownership. These simple acts — often prompted by love and a desire to help — may prompt some trouble at tax time as it unintentionally sets up a legal situation known as a bare trust.
Three years ago, Ottawa hit pause on rules that required family members in situations like these to file a trust tax return. Now, that pause is over. Starting with the 2026 tax year, certain bare trusts must file, with the first returns due next spring.
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The good news is that review and update of bare trust rules actually carve out most of the situations that once worried families; however, the details matter. The exemptions to filing a bare trust now focus on the property in question and how much it’s worth. And this makes the weeks before year-end the time to double-check and confirm where you and your family stand when it comes to tax regulations.
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What is a bare trust? Should you be concerned? Why does the CRA care?
A bare trust exists when one person holds legal title to property but someone else uses it, benefits from it and controls it.
According to guidance from the Canada Revenue Agency (CRA), the person on title essentially acts as an agent for the true owner.
The reason why families get caught in bare trust taxation issues is because no paperwork is needed to create one. It also means that a relatively large number of Canadians have bare trusts without realizing it.
So, why would the CRA care? Because collecting ownership details regarding property in bare trusts helps reduce the use of trusts to hide who really owns or controls property. Requiring full disclosure of who owns and controls these assets means it’s harder for individuals and interested parties to hide assets and avoid paying taxes.
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How are bare trusts taxed?
When a family is in a position where one person owns an asset and another is responsible for managing that asset, then a bare trust must file a tax return by submitting a T3 Trust Income Tax and Information Return (T3 return) along with Schedule 15.
Schedule 15 lists the name, address, date of birth, country of residence and tax ID number of every trustee, settlor — an individual or legal entity that creates a trust and legally transfers ownership of assets into that trust — and beneficiary.
Income is still reported on the true owner’s personal tax return.
Why did the rules for bare trust tax reporting keep getting delayed?
Bare trusts were first swept into expanded trust reporting for the 2023 tax year. But weeks before the deadline, the CRA waived those filings, acknowledging in a March 2024 tax tip that the rules had an “unintended impact on Canadians.” Filings for 2024 and 2025 were later dropped as well.
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The permanent fix came through Bill C-15, the federal budget implementation act. It received royal assent on March 26, 2026. Through the Bill C-15 amendment, the law replaced the original rule with a narrower category called “reportable bare trusts,” which applies to tax years ending on or after Dec. 31, 2026. The CRA refreshed its guidance on Oct. 5.
Based on Bill C-15 amendments, who’s off the hook?
Part of the issue with the original bare trust regulations is that everyday Canadian families trying to make decisions and help each other out ended up on the wrong side of the tax regulations. To fix this issue, tax authorities went back and updated the rules. As a result, there are now several common family arrangements that aren’t reportable as bare trusts anymore, including:
- Joint accounts where everyone on the account is also a beneficial owner, such as spouses sharing an investment account
- A home with a relative on title, as long as it qualifies as the principal residence of one or more of the owners (for example, a parent who cosigned a child’s mortgage)
- A family home where only one spouse is on title but both live there
- Property held under a court order
Even a reportable bare trust can skip filing, unless the CRA asks, if it counts as a “listed trust.” To qualify as a ‘listed trust’ two thresholds matter most:
- The total fair market value (FMV) never tops $50,000 during the year, whatever the assets are
- The total FMV never tops $250,000, every trustee is an individual, every beneficiary is a related individual and the assets are limited to items such as cash, guaranteed investment certificates (GICs), publicly traded securities, mutual funds or personal-use property like a cottage
For 2025 and later, “related” also covers aunts, uncles, nieces and nephews.
Who still needs to file a bare trust return for 2026?
To help Canadians establish whether or not they have to file a bare trust tax return, the CRA offered a few illustrative examples.
For instance, Amanda is added to her father’s bank account in June 2026 to help with his banking, and she agrees she can’t use the money. With the balance peaking around $16,000 that year, no filing is needed.
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Fast-forward to 2027, when Amanda’s father deposits funds into the bank account and the balance reaches just over $310,000. Now, Amanda and her father must submit a bare trust tax return — so a T3 and a Schedule 15 — with their 2027 tax return submission, because the addition of funds pushed the sum of the bank account above the $250,000 threshold.
Moving forward, families need to keep the following in mind:
- Filing obligations are assessed year by year
- Filing obligations hinge on the highest value during the year, not the Dec. 31 balance
For family members with more complicated arrangements — such as a relative or company holding title to a rental or commercial property for another family member — the rules are more complicated, so seek professional guidance.
Also, families need to know that accounts holding assets outside the approved list can also lose the $250,000 exemption.
Penalties for not filing a bare trust tax return
The penalties for not filing a required tax return can add up quickly. Missing a required filing will cost you $25 per day, with a minimum of $100 penalty, and a maximum of $2,500, when no tax is owing.
Plus, knowingly submitting false statements or gross negligence carries steeper penalties: the greater of $2,500 or 5% of the trust property’s highest value that year.
Co-mingled finances? Here’s what you need to do
To make sure you don’t get hit with penalties for missing a required filing, do the following:
- List every account or property where the name on title doesn’t match who really owns it
- Check each one against the exclusions for joint owners and family homes
- Compare the 2026 peak value to the $50,000 and $250,000 thresholds, and confirm which asset types are held
- If a filing is needed, start gathering Schedule 15 details, including social insurance numbers (SINs), before the March 31, 2027 deadline
- If you’re unsure whether a trust even exists, ask a lawyer, since the CRA won’t make that call for you
For most families who share a home or help a parent with banking, the answer will be simple: no bare trust tax return is required. Still, it’s good to be aware of threshold, limits and exemptions because a relatively simple decision can change the arithmetic and prompt a change in tax return requirements.
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Romana King, Senior Editor at Money.ca, also writes for various North American publications and the RKHomeowner blog. Her book, House Poor No More, is an Amazon bestseller and five-time award winner, including the 2022 New York CPA Society's Excellence in Financial Journalism (EFJ) Book Award.
