Tax rules don’t usually make headlines — but Canada’s expanded trust reporting requirements are the exception. Over the past couple of years, these changes have quietly caught a lot of people off guard, and the biggest surprises are still ahead. If you’re a trustee, a beneficiary, or simply have your name on a joint account or a property title with a family member, this one’s worth reading.
So, What Actually Changed?
New enhanced trust reporting rules introduced in 2023 significantly expanded the number of trusts required to file a T3 return. Under the changes, many trusts must now file annually — even if the trust has no tax payable, no capital gains, and no disposition of capital property during the year.
That last part is the kicker. Filing used to be triggered by activity — income earned, assets sold, taxes owing. Now, simply existing as a trust can be enough to trigger a filing obligation. That’s a meaningful shift, and a lot of people haven’t caught up to it yet.
Don’t Panic – There Are Exemptions
Before you start worrying, there’s good news: many trusts don’t have to file at all. Trusts exempt from the rules include non-taxable trusts such as RRSPs, and for personal trusts, qualified disability trusts are also excluded. Trusts that have been in existence for less than three months are also exempt for 2024 and subsequent years.
For smaller family trusts, the rules have been softened too. Draft legislation proposes to exclude personal trusts in two situations:
- Trusts where the fair market value of property is $50,000 or less throughout the year.
- Trusts where all trustees and beneficiaries are related individuals with property valued at $250,000 or less — provided the trust holds only certain qualifying assets such as money, GICs, mutual funds, listed shares, and personal-use property.
One important caveat: even when a trust qualifies for these exemptions, a T3 return is still required if the trust has tax payable, realizes a capital gain, or disposed of capital property during the year. So the exemptions take you far, but not all the way in every scenario.
The Bare Trust Problem
Here’s where things get interesting — and where we’ve seen the most confusion with clients.
Most people picture a trust as something formal: a legal document, a lawyer’s office, a family estate. But a “bare trust” can arise much more casually than that. Where a legal owner of property holds it for the benefit of someone else and can reasonably be considered to act as agent for the beneficial owner, a trust return must be filed.
Think: a parent going on title to help their adult child qualify for a mortgage. A grandparent holding a bank account “in trust for” a grandchild. A joint investment account where not everyone is actually the beneficial owner. These everyday arrangements can quietly create a trust filing obligation — and most people have no idea.
The CRA has been rolling this out carefully. Bare trusts were not required to file a T3 for the 2023 and 2024 taxation years, and on December 16, 2025, the CRA confirmed that bare trusts will not need to file for the 2025 tax year either.
That’s a relief — but don’t get too comfortable.
What’s New in 2026
The grace period ended this year. Starting in 2026, some bare trusts will be required to file a tax return. The CRA’s position is that a trustee is acting as agent for a beneficiary when the trustee has no significant powers or responsibilities, cannot take action without the beneficiary’s instructions, and functions only to hold legal title to the property.
There are still some sensible carve-outs:
- When real estate is held jointly by related legal owners and one could designate it as their principal residence, filing is not required — the classic example being a parent going on title with their child to help secure mortgage financing.
- If all legal owners of a property are also the beneficial owners, no return is required.
- Joint accounts under $250,000 may also be exempt, even where not all account holders are beneficial owners.
So plenty of everyday arrangements will still fall outside the net.
If You Do Have to File: What Gets Disclosed?
For trusts that are caught by these rules, the reporting requirements go well beyond what most people expect. The T3 return must include identifying information for each trustee, beneficiary (including contingent beneficiaries), and settlor of the trust, as well as any person who has the ability to exert influence over trustee decisions regarding the allocation of income or capital.
That’s a wide circle. If you have a family trust that names future grandchildren as contingent beneficiaries, for example, that information now has to be disclosed to the CRA. It’s not just about the numbers anymore.
Our Take
These rules are broader than most people assume, and the 2026 bare trust deadline is going to catch some families off guard. If you’re involved in any arrangement where property is held on behalf of someone else — even informally — it’s worth having a conversation sooner rather than later.
As always, we’re here to help you sort through it. If you’re not sure whether any of this applies to you, reach out to our office and we’ll work through it together.
- Jaret