On October 29, 2024, the Government of Canada announced that, for the upcoming tax year, bare trusts will not be required to file a T3 Income Tax and Information Return and Schedule 15 “Beneficial Ownership Information of a Trust” form: see Trust reporting for the 2024 tax year – Bare trusts not required to file the T3 Return and Schedule 15. This announcement essentially confirms that the status quo is to continue, as bare trusts were also exempted from the new trust reporting rules for the 2023 tax year.
The extension of the exemption for bare trusts is not a surprise, given that approximately three months ago, the government proposed delaying the trust reporting requirements for bare trusts by another year. However, extending the exemption was not the only legislative change affecting bare trusts that was proposed by the Department of Finance. As previously noted on the blog, other changes that would impact bare trusts which were proposed in August of 2024 include a new definition of “deemed trust” – a new title which would refer to bare trusts – and the creation of a new category of deemed trusts that would be exempted from the trust reporting rules: see Government Proposes Delaying Trust Reporting Rules for Bare Trusts Until 2026. At this time, it is not clear when, or if, the other legislative amendments related to bare trusts will be adopted, as the Canada Revenue Agency has not yet provided any further information regarding the proposed technical amendments.
Despite the continued exemption of bare trusts from the trust reporting rules, the October 29th announcement does note that the CRA will have the power to make a direct request for a T3 and Schedule 15 with respect to bare trusts for the upcoming tax year, so not all bare trusts may end up being exempted.
The October 29th announcement also confirms that the current trust reporting requirements will continue to apply to “other affected trusts with taxation years ending after December 30, 2023.” Accordingly, trusts that were required to file a T3 and Schedule 15 for the 2023 tax year will have to do so again for the 2024 tax year, in addition to new trusts with a taxation year ending after December 30, 2023. At this time, it appears that the amendments to the Income Tax Act that would affect other trusts, also proposed in August of 2024, will not apply to trust reporting for the upcoming year. To learn more about the proposed amendments that would affect other trusts, see Suzana’s recent post Additional Amendments Proposed for Canada’s Trust Reporting Rules.
Lastly, the October 29th announcement states that further updates, when available, will be posted online on a government page titled Trust income tax return. When there are further developments, we will also share them here on the blog.
Thank you for reading, and have a great day!
Ian.