Bare Trust Reporting Returns for 2026: Who Will Actually Have to File a T3?

Bare trust reporting is returning for the 2026 tax year, but many everyday arrangements will be exempt. Certain reportable bare trusts must file a T3 Trust Income Tax and Information Return and Schedule 15 even though the income and capital gains associated with the trust property are reported by the beneficial owner. The requirement to file depends on the legal relationship, ownership, asset values and applicable exceptions. These rules are enacted law. Bill C-15 received Royal Assent on March 26, 2026.

What is a bare trust?

A bare trust generally separates legal ownership from beneficial ownership.

It  is a legal arrangement in which one person or entity (the trustee) holds legal title to property on behalf of another person or entity (the beneficial owner), while having no independent authority to manage, sell, or otherwise deal with the property except as directed by the beneficial owner.

For example, an individual purchases a rental property but registers the legal title in the name of a nominee corporation (such as 1234567 Manitoba Ltd.) under a bare trust agreement. Although the nominee corporation is the registered owner of the property, the individual remains the beneficial owner, retains full control over the property, receives all rental income, pays all related expenses, and makes all decisions regarding its management and sale.

What years are impacted?

The CRA announced that it would not require bare trusts to file T3 returns or Schedule 15 for the 2023 taxation year unless specifically requested. Legislative amendments subsequently exempted bare trusts from the reporting requirements for taxation years ending in 2024 and 2025.

Certain bare trusts will become reportable for years ending on or after December 31, 2026.

Bare trusts are required to have a calendar year-end.

For a December 31, 2026 year-end, the filing deadline is March 31, 2027:

90 days after year-end.

Exemptions available

Below is a list of most common exemptions (additional exemptions exist, but they are beyond the scope of this blog post):

The legislation provides two types of relief: exceptions that exclude certain arrangements from the definition of a reportable bare trust, and exemptions from annual T3 reporting for reportable bare trusts that qualify as listed trusts.

1. Assets worth $50,000 or less

An arrangement can qualify as a listed trust if its total assets have a fair market value of no more than $50,000 throughout the year. There is no restriction on asset type under this exemption. Exceeding the limit during the year defeats this exemption, even if the year-end value falls below it.

2. Certain family arrangements worth $250,000 or less

The larger exemption requires every trustee to be an individual, every beneficiary to be an individual related to each trustee (subject to a limited exception for certain graduated rate estates), and the total fair market value of qualifying assets to remain at or below $250,000 throughout the year.

Only specified assets qualify. Examples include money, qualifying GICs, listed securities, mutual fund investments, personal-use property and certain Canadian life insurance policies. Private-company shares and income-producing rental real estate do not qualify merely because their value is below $250,000.

3. Joint ownership where the owners and beneficiaries match

The joint-ownership exception requires every beneficiary to be a legal owner at the relevant time, with no legal owner who is not also a beneficiary. A joint account label alone is insufficient.

4. Qualifying principal residence arrangements

Where the legal owners are related individuals and the property would qualify as the principal residence of at least one legal owner for the year if designated, a specific exception applies. This can cover a parent added to title to help a child obtain financing when the child is also on title and the home qualifies.

A separate exception can cover a home held for a spouse or common-law partner where the individual legal owner could designate it as their own principal residence.

5. Assets held for the benefit of partnership

Where each legal owner is a partner holding the property solely for the use or benefit of the partnership, and the partnership is required to file a partnership information return T5013 (or would be if not for a CRA exemption).

6. Trust that existed for less than three months

Trust that existed for less than three months are not required to file a T3 return for that period unless requested by the CRA.

Who may still have to file?

Arrangements warranting review include nominee corporations holding commercial property, individuals holding property on behalf of someone else, and accounts that exceed the available exemptions.

These are applications of the statutory tests, rather than automatic filing categories, first confirm that a reportable bare trust exists, then check every relevant exemptions or exception.

What must be submitted?

A reportable bare trust that is not a listed trust needs to file a T3 return and Schedule 15.

Schedule 15 identifies trustees, settlors, beneficiaries and controlling persons. Required information generally includes names, addresses, birth dates for individuals, countries of residence and tax identification numbers.

CRA says a reportable bare trust that is a "listed trust" does not need to file unless requested.

In any case, income, gains and losses from bare-trust property remain reportable by the beneficial owner. The filing requirement is essentially an information-reporting obligation, not an additional income tax liability.

What are the penalties for non-compliance?

Failure to file a required T3 trust return by the deadline may result in a penalty of $25 per day, subject to a minimum of $100 and a maximum of $2,500.

More significant penalties may apply where the failure to file is intentional or results from gross negligence. In such cases, the penalty may be equal to the greater of $2,500 or 5% of the highest fair market value of the trust's property during the taxation year.

Given the potentially substantial penalties, it is important to review your bare trust arrangements and determine whether a T3 return is required well before the filing deadline.

This blog has been prepared to provide general guidance and should not be considered specific advice. It may not address individual situations, and the information contained should not be used as a basis for action or inaction without seeking professional advice tailored to your circumstances. For personalized assistance, please contact Jenkyns Smith CPA's LLP.