(From the March 2026 edition of eFORUM) 

By Jamie Golombek and Debbie Pearl-Weinberg

Change is here and it comes in the form of T3 filings.

New, enhanced trust reporting rules introduced in 2023 significantly expanded the number of trusts required to file a T3 return. Under the changes, many trusts must now file a T3 annually, even if they have no tax payable, did not realize capital gains or dispose of capital property during the year. The rules also require more detailed information to be disclosed on T3 trust returns than in the past.

Given this, reviewing the new rules, especially as they apply to bare trusts (defined below), may help clarify whether clients are required to file a T3 tax return for 2025, 2026 and in future years.

Expanded trust reporting rules

Unless one of the exemptions outlined below applies, all trusts with a taxation year ending on Dec. 31, 2023 (or later) must now file a T3 – even if the trust has neither tax payable, a capital gain nor a disposition of capital property in the year. Specific rules apply for bare trusts.

Included in the trusts exempt from the rules are non-taxable trusts. These include registered retirement savings plans (RRSPs). For personal trusts, qualified disability trusts are also excluded.

Note that the new rules do not apply for 2024 and subsequent years to trusts that have been in existence for less than three months.

Additional exemptions for smaller trusts

Some exemptions have been modified and, as of 2024, draft legislation proposes to exclude the following personal trusts from reporting:

• Trusts where the fair market value (FMV) of the property in the trust is $50,000 or less throughout the year.
• Trusts where all trustees and beneficiaries are related individuals, and if the FMV of the property in the trust is $250,000 or less throughout the year (up from $50,000 under the original rules), provided the trust holds only certain types of assets: money, deposits, guaranteed investment certificates (GICs), mutual funds, segregated funds, exchange traded funds, listed shares or debt and certain government debt or personal-use property.  

Even when a trust qualifies for these exemptions, a T3 return is still required if the trust has tax payable, realizes a capital gain, or disposed of capital property during the year. They are not, however, required to provide the additional reporting information required of non-exempt trusts.

Understanding bare trusts

Although the Income Tax Act does not use the term “bare trust,” where a legal owner of property holds the property for the benefit of someone else (the “beneficial owner”), and the legal owner can reasonably be considered to act as agent for the beneficial owner, a trust return must be filed. Such arrangements are commonly referred to as bare trusts.

Bare trusts were not required to file a T3 for the 2023 and 2024 taxation years. On Dec. 16, 2025, the Canada Revenue Agency (CRA) confirmed that bare trusts will not need to file for the 2025 tax year either.

New requirements beginning 2026

Starting in 2026, however, some bare trusts will be required to file a tax return. The CRA’s position is that it considers a trustee to be acting as agent for a beneficiary when the trustee has no significant powers or responsibilities, cannot take action without the beneficiary’s instructions, and functions only to hold a legal title to the property.

When bare trusts may be exempt

There are also specific exemptions that apply to bare trust reporting.

For instance, when real estate is held jointly by legal owners who are related and one of those owners could designate the property as their principal residence, filing a trust return is not required. This situation might arise, for example, when a parent goes on title to a property along with their child, to help the child obtain mortgage financing.

Similarly, if all of the legal owners of a property are also beneficial owners – and no beneficiary exists who is not a legal owner – no tax return is required. This could arise when a joint investment or bank account is held by family members and all are beneficial owners.

Other bare trusts may still qualify for filing exemptions. For instance, if there is concern that an account opened by a parent or grandparent “in trust for” a minor child could be considered an agency arrangement for purposes of these rules, accounts under $250,000 likely won’t need to file. Similarly, even in situations where the account holders of a joint account are not all beneficial owners of the account, these joint accounts could be exempt if they’re under $250,000.

Additional reporting requirements

When a trust is subject to the revised reporting rules, the T3 return must include identifying information for each trustee, beneficiary (including contingent beneficiaries) or settlor of the trust. It must also disclose any person who has the ability to exert influence over trustee decisions regarding the trust’s allocation of income or capital.

Draft legislative proposals would exempt alter-ego and joint spousal (partner) trusts from the requirement to report contingent beneficiaries.

Jamie Golombek, FCPA, FCA, CPA (IL), CFP, CLU, TEP, is managing director, tax and estate planning with CIBC Private Wealth in Toronto. He can be reached at jamie.golombek@cibc.com.

Debbie Pearl-Weinberg, LL.B., is executive director, tax and estate planning with CIBC Private Wealth in Toronto. She can be reached at debbie.pearl-weinberg@cibc.com.