— August 18, 2026 —

Anna Malazhavaya LL.B is back at AJAG this fall with an important update on bare trusts. For CPAs who attended and enjoyed Anna’s previous AJAG courses on trust reporting, much has changed. After two years in which bare trusts were effectively removed from the enhanced reporting regime, new rules apply for taxation years ending on or after December 31, 2026. And this time, the rules are different.

Which arrangements constitute a reportable bare trust? Which common arrangements are now excluded? How do the new $50,000 and $250,000 thresholds work? What information should practitioners begin collecting from clients now? And where could significant penalties arise if a reportable arrangement is missed?

In the article below, we provide a practical introduction to the new landscape for CPAs in public practice. But there is considerably more to know.

For many Canadian tax practitioners, the term “bare trust” has become synonymous with administrative uncertainty and shifting deadlines. After the reporting requirements were waived for the 2023 taxation year and a subsequent exclusion was applied for the 2024 and 2025 periods, many firms understandably placed these files on the back burner. However, as of August 17, 2026, the landscape has changed. The federal government has moved forward with a more targeted reporting regime that reinstates filing obligations for “reportable bare trusts” starting with taxation years ending on or after December 31, 2026.

This analysis provides a walk-through of the current statutory framework to assist Chartered Professional Accountants (CPAs) in identifying which client arrangements are now caught by the reporting net and which qualify for new relieved exceptions.

Understanding the “Deemed Trust” Framework

The Income Tax Act (the “Act”) does not utilize the common law term “bare trust.” Instead, Subsection 150(1.3) creates a “deemed trust” for reporting purposes [1]. For taxation years ending on or after December 31, 2026, an express trust is deemed to exist for filing purposes if:

  • One or more persons (the “legal owner”) have legal ownership of property held for the use or benefit of one or more persons or partnerships.
  • The legal owner can reasonably be considered to act as an agent for those who have the use or benefit of the property.

In these scenarios, the legal owner is deemed to be a trustee, and the person with the use or benefit of the property is deemed to be a beneficiary. This captures common arrangements such as corporate nominees, parents co-signing for a child’s mortgage where the child remains the sole beneficial owner, and joint bank accounts intended for administrative assistance [3].

Determining Filing Eligibility: The Logic Walk-Through

When reviewing a client file for potential 2026 reporting, CPAs must apply a sequential statutory test.

Step 1: Identify an Express Trust The reporting rules apply primarily to express trusts—arrangements created with a clear intent to separate legal and beneficial ownership. If the arrangement is a resulting or constructive trust established by law or judgment, it is generally excluded from the annual filing requirement unless specific tax is payable.

Step 2: Apply the Bare Trust Specific Exceptions (Subsection 150(1.31)) Even if an arrangement meets the agency criteria of 150(1.3), it is not a “reportable bare trust” if it meets any of the following:

  • Identical Ownership: Every beneficiary is also a legal owner at all times in the year, and there are no legal owners who are not beneficiaries [1]. This exempts most standard joint ownerships where all parties share title and benefit equally [5].
  • Principal Residence (Related Persons): The legal owners are related individuals, and the property would be the principal residence of one or more legal owners if they designated it as such.  This is the “parent-on-title” exception for mortgage purposes.
  • Principal Residence (Spouses): An individual holds legal title for the use or benefit of their spouse or common-law partner, and the property would be the legal owner’s principal residence.

Step 3: Apply the “Small Trust” Thresholds (Subsection 150(1.2)) If the trust is not exempted by the 150(1.31) agency carve-outs, it may still be a “listed trust” exempt from Schedule 15 reporting:

  • $50,000 Asset Limit: Under Subsection 150(1.2)(b), a trust that holds assets with a total fair market value (FMV) not exceeding $50,000 throughout the year is a listed trust. For 2026, there are no restrictions on the type of assets held for this threshold [3].
  • $250,000 Family Trust Limit: Under Subsection 150(1.2)(b.1), the threshold increases to $250,000 if each trustee is an individual, each beneficiary is an individual related to each trustee (or a graduated rate estate), and the assets consist only of specified types (e.g., cash, GICs, listed shares, personal-use property).

Mandatory Information: Schedule 15

If no exception applies, the trust must file a T3 return and Schedule 15. The practitioner must collect the following data for all “reportable entities” (trustees, beneficiaries, settlors, and controlling persons):

  • Legal name and full address;
  • Date of birth (for individuals);
  • Tax Identification Number (SIN, Business Number, or Trust Number); and
  • Jurisdiction of residence.

The definition of “settlor” for 2026 is broad. It includes any person or partnership that has directly or indirectly transferred property to the trust, unless the transfer was for FMV consideration or pursuant to a legal obligation.

Proactive Modeling: Identifying Missing Data

To properly advise clients, CPAs require the following information, which is often missing from standard year-end files:

  1. Continuous FMV Tracking: If a trust holds $45,000 in cash and the balance fluctuates to $51,000 for even one day, it fails the $50,000 exclusion under 150(1.2)(b).
  2. Statutory Relationship Mapping: The $250,000 exception relies on the definition of “related person.” For these rules, a related person includes aunts, uncles, nieces, and nephews.
  3. Title vs. Benefit Analysis: Practitioners must confirm if the legal owner holds all or only partial beneficial interest. If a parent is on title for 1% beneficial interest and the child has 99%, the arrangement is a bare trust for 99% of the property and must be analyzed for exceptions.

Penalty Calculation Mechanics

The penalties for non-compliance are significant and bifurcated based on intent:

  • Standard Late-Filing: Under Subsection 162(7), if a trust has no tax payable, the penalty is $25 per day, with a minimum of $100 and a maximum of $2,500.
  • Gross Negligence: Under Subsection 163(5), if a person knowingly or under circumstances amounting to gross negligence fails to file, the penalty is the greater of $2,500 and 5% of the highest FMV of all property held by the trust at any time in the year.

For a client with a $1,000,000 nominee-held property, a gross negligence failure to file results in a minimum penalty of $50,000.

Conclusion

The 2026 reporting season will require a higher degree of diligence in the client intake process. CPAs should update their year-end questionnaires to move beyond “Do you have a trust?” to more targeted queries regarding title ownership, mortgage co-signing, and joint account intentions. Identifying these arrangements now is essential to ensure that FMV thresholds are monitored and SIN/TIN information is secured before the March 31, 2027, deadline.

Want to Go Deeper?

This article is intended to help you identify the issue. Anna’s course is designed to help you work through it.

Learn more about the course and register here: Bare Trust Reporting Rules: Beyond Compliance—Interpretation and Risk Management

Disclaimer

This article is provided for general educational and informational purposes for Chartered Professional Accountants and other professional advisors. It does not constitute, and should not be relied upon as, accounting, tax, legal or other professional advice. The application of Canada’s trust reporting requirements, including the determination of whether a particular arrangement constitutes a trust or reportable bare trust and whether an exemption applies, depends upon the particular facts and circumstances and the applicable legislation in force at the relevant time. Tax legislation, administrative policies and interpretations may change. Readers should consult the current provisions of the Income Tax Act, CRA guidance and, where appropriate, obtain advice from qualified tax and legal professionals before acting on the information contained in this article. AJAG Professional Development and the author accept no responsibility for any loss or consequences arising from reliance upon this article.