Newswire

BE AWARE OF NEW REPORTING RULES: Are You Associated With a “Bare Trust” Arrangement?

May 27, 2024

Are you a legal owner of an asset where someone else is a beneficial owner and has a beneficial interest and oversight of the asset? I f so, you may be holding a “bare trust” and have a filing requirement where you previously did not.

Here are some examples where a bare trust arrangement may exist: • You have been added to the title of an adult child’s home in order to help your child qualify for a mortgage. • You have been added to the title of an elderly parent’s home for the sole purpose of facilitating estate planning.

In Brief: What Is a Bare Trust?

According to the CRA, a bare trust “exists where a person, the trustee, is merely vested with the legal title to property and has no other duty to perform or responsibilities to carry out as trustee, in relation to the property vested in the trust.”

New Reporting Requirements

Why is this important? Starting in 2023, even if there is no income or activity to report, all trusts and trust-like relationships must file a T3 Trust Income Tax and Information Return within 90 days of the trust’s tax year end. The reporting requirements have been expanded to
include bare trusts.

However, there is good news. Given that bare trust arrangements are new to these rules, the CRA will provide relief for penalties fi the T3 return has not been filed by the deadline. This relief is only applicable to bare trusts for the 2023 tax year. Certain trusts are excluded from
the reporting requirements, including those less than three months old at year end, and trusts holding certain assets with a fair market value of $50,000, as examples.

Seek Assistance

Since the intent of the arrangement can impact whether or not it is considered a bare trust, if you hold an arrangement that has as separate legal and beneficial owner, it is best to consult tax and legal experts. For more information: https://www.canada.ca/en/revenue-agency/services/tax/trust-administrators/t3-return/new-trust-reporting-requirementst3-filed-tax-years-ending-december-2023.html

1.https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/p-015/
treatment-bare-trusts-under-excise-tax-act.html

This is not intended to be a legal discussion of bare trusts. Please seek professional advice

Recent Posts

August Market Insights: Beyond The AI Bottleneck

A leadership transition is already underway, but much of the market remains anchored to the last trade. Investors are still crowded into semiconductors, memory and artificial intelligence (AI) infrastructure supported by passive flows and a sell-side that continues to extrapolate an era of outsized earnings surprises that has largely run its course.

Our Continuing Dependence on Oil: Will the Energy Landscape Shift?

The conflict with Iran served as an abrupt reminder of energy’s central role in global order. In the spring, the Strait of Hormuz exposed the risks of routing roughly 20 percent of global supply through a single chokepoint. The resulting disruptions not only drove fossil fuel prices sharply higher but also reinforced a consequence that extends well beyond economics: energy security is inseparable from national security.

What Jevons Paradox Tells Us About the World Around Us

In 1865, British economist William Jevons observed a seeming paradox with the rise of the steam engine and its effect on coal consumption. As coal use became more efficient, he expected total coal consumption to decline. Instead, it surged. This observation remains relevant to the world around us.

Challenging the Artificial Intelligence Job Apocalypse

Is artificial intelligence (AI) coming for your job? According to The Economist, one in three people believe AI will cause widespread job losses, while seven out of 10 believe it will make it harder for people to find work.

Are the Bond Markets Sending a Signal?

Many market observers have recently turned their attention to the fixed-income markets, as long-term government bond yields have risen to levels not observed in more than two decades. By the end of May, 10-year and 30-year U.S. Treasury yields had risen to levels last seen before the 2008 crisis. Japan’s long-end bond yields also surged to multi-decade highs. Even in Canada, government bond yields hit multi-year highs.

The opinions contained herein are the opinions of the author and readers should not assume they reflect the opinions or recommendations of Wellington-Altus Private Wealth. Assumptions, opinions and information constitute the author’s judgement as of the date this material and subject to change without notice. We do not warrant the completeness or accuracy of this material, and it should not be relied upon as such. Before acting on any recommendation, you should consider whether it is suitable for your particular circumstances and, if necessary, seek professional advice. Graphs and charts are used for illustrative purposes only and do not reflect future values or future performance of any investment. The information does not provide financial, legal, tax or investment advice. Particular investment, tax, or trading strategies should be evaluated relative to each individual’s objectives and risk tolerance. All third party products and services referred to or advertised in this presentation are sold by the company or organization named. While these products or services may serve as valuable aids to the independent investor, WAPW does not specifically endorse any of these products or services. The third party products and services referred to, or advertised in this presentation, are available as a convenience to its customers only, and WAPW is not liable for any claims, losses or damages however arising out of any purchase or use of third party products or services. All insurance products and services are offered by life licensed advisors of Wellington-Altus.