Bare trusts no longer exempt from filing

Real estate investors who own properties under a Bare Trust arrangement need to be aware of CRA’s new reporting rules.

In prior years bare trusts were exempt from filing returns with Canada Revenue Agency (CRA). Going forward, any trust with a fiscal year end of December 31, 2023 or later must now file T3 Trust Returns annually.

A bare trust is also required to complete Schedule 15 (Beneficial Ownership Information of a Trust) annually.

Late filing penalties

While there are no expected income tax implications — you’re unlikely to owe any tax as a consequence of filing either of these documents — the late filing penalties are steep. The penalty is $25 for each day late, with a minimum penalty of $100 and a maximum of $2,500.

Note for filings due during the 2024 calendar year (only): CRA will provide relief to bare trusts by waiving the penalty payable for the 2023 tax year in situations where the T3 Return and Schedule 15 are filed after the filing deadline. However, this leniency does not apply to filings that were knowingly filed late, or were late in an act of gross negligence.

Questions? Get in touch!

Personal Tax Advisors has experience in filing trust returns and other income tax issues relating to real estate investors, including Section 216 elections, foreign property rules, and the Underused Housing Tax (UHT). Contact us to learn more about the services we offer.