Are you part of a “bare trust”?

Many Canadians might find themselves involved in a “bare trust” agreement without realizing it, particularly if they share joint bank accounts or have co-signed mortgages. The Canada Revenue Agency (CRA) said in an announcement recently that bare trusts no longer have to file a T3 Income Tax and Information Return, including Schedule 15 for the 2023 tax year unless the agency makes a direct request.

In a bare trust, one person legally owns an asset, but it technically belongs to someone else, known as the beneficiary. Common examples include joint bank accounts among family members or parents co-signing mortgages for their children.

To file, trustees must obtain a trust identification number and submit a T3 Trust Income Tax Return. A new requirement called Schedule 15, which tracks beneficial owner information, must also be included. Although the process may seem complex at first, resources on the CRA website can help guide Canadians through it.

The Energy Credit Union advises our members to seek guidance from a lawyer or financial planner to ensure compliance with the new regulations. We recommend that our members consult with their legal or tax advisors to determine if any accounts they hold, whether with our Credit Union or elsewhere, could be considered a Bare Trust or have implications under trust law. Understanding the legal and tax implications of their account arrangements is crucial for compliance with relevant regulations and making informed financial decisions. While our Credit Union is dedicated to providing assistance and information, personalized advice from qualified professionals is recommended for each individual’s circumstances.

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