The Canada Revenue Agency has announced it will again be waiving a new type of tax submission, as the federal government looks to clarify the reporting rules.
The CRA planned to introduce new rules for bare trusts this year, but Tuesday’s announcement marks the second time these updates have been pushed back.
The CRA said previously that it would require the submission of a T3 Return or Schedule 15 for all bare trusts. On Tuesday, the agency announced it would be waiving the requirement, except for those who receive a direct request.
Also known as naked trusts, bare trusts are arrangements where the owner or owners of a property maintain the property’s legal title, but all duties, obligations and responsibilities belong to a designated trustee.
One example is a parent being on the title of their adult child’s home to help their child obtain a mortgage, but not actually living in or maintaining the home. Similarly, an adult relative opening a bank account for a youth could be considered a bare trust scenario. Another is a corporate bank account opened by shareholders on behalf of a company.
Bare trust reporting was intended to start with tax filings made in the spring, but shortly before those reports would have been due, the CRA said it was holding back on implementing the new measure, citing confusion over the rules.
The delays announced in March and October are, in part, to buy time for an investigation by federal Department of Finance officials into possible amendments that would clarify what is actually required when it comes to reporting, according to the Office of the Taxpayers’ Ombudsperson.
The office launched an investigation over the summer into the bare trust requirement, and said stakeholders found value in requiring such documentation be filed, but that the exemption came too late and that Canadians were confused by the rules around the reporting.
Should any amendments be approved, the office said, there won’t be enough time for those who assess tax filings to get familiar with the changes in time to handle 2024’s submissions.
The 2024 exemption applies to bare trusts only. According to CRA officials, other affected trusts will still require annual reporting.
With files from CTVNews.ca’s Hunter Crowther
