For taxation years ending on or after December 31, 2026, certain bare trust arrangements must file a T3 return. For a December 31, 2026 year end, that return is due March 31, 2027.
This is a change. Bare trusts were not required to file for 2023, and the Canada Revenue Agency confirmed the same for taxation years ending on or after December 31, 2024 and before December 31, 2026.
The legislation contains several exceptions, and a number of common family arrangements may fall within one. Each exception carries conditions that must be satisfied — in most cases throughout the entire year.
Do you have to file a T3 for 2026? Start here
These questions narrow the issue. They do not settle it, because each exception below has conditions that have to be checked against the specific facts.
1. Does someone hold legal title to property for another person’s benefit? If the person on title is also the person who benefits, and no one else is involved, the arrangement described in these rules does not arise.
2. Is the title-holder essentially acting as an agent for the person who benefits? This is the statutory test. Without it, the deeming rule does not apply.
3. Is everyone on title also a beneficiary, and is every beneficiary also on title? If so, an exception is likely available — see exception (a).
4. Is the property a home, and is everyone on title an individual related to the others? If it would qualify as a principal residence for at least one of them, exception (b) may apply. The conditions are specific and are set out below.
5. If none of these resolve the question, a filing obligation may exist, and the arrangement is worth reviewing with a professional well before March 31, 2027.
What changed for the 2026 tax year
The earlier relief has ended
Bare trusts were brought within the expanded trust reporting rules and then repeatedly released from them. Per the CRA’s guidance on the enhanced reporting rules, they were not required to file for 2023, and were not subject to the trust reporting rules for taxation years ending on or after December 31, 2024 and before December 31, 2026. That relief does not extend to 2026.
The legislation does not use the term “bare trust”
This explains why searching the Income Tax Act for “bare trust” returns nothing, and why advisers describe the rule in different terms.
Bill C-15, the Budget 2025 Implementation Act, No. 1, received Royal Assent on March 26, 2026. Its trust provisions do not use the phrase “bare trust” or “reportable bare trust.” Those are the CRA’s administrative labels and the profession’s shorthand.
What the legislation enacts is a deeming rule. Subsection 150(1.3) of the Income Tax Act is headed “Deemed trust.” It treats an arrangement that would not otherwise be a trust for tax purposes as one, for the purposes of the filing rules. The exceptions sit in subsection 150(1.31).
The deeming rule and its exceptions apply, in the words of the Act, to “taxation years that end after December 30, 2026.” A December 31, 2026 year end is the first year affected.
Does subsection 150(1.3) apply to the arrangement?
The deeming rule applies where both of the following hold:
• one or more persons — described in the legislation as a “legal owner” — have legal ownership of property held “for the use of, or benefit of” one or more other persons or partnerships; and
• the legal owner “can reasonably be considered to act as agent” for those persons or partnerships.
Both conditions must be met. Legal ownership alone is not sufficient; the agency element is what distinguishes these arrangements from ordinary co-ownership.
Where the rule applies, each legal owner is considered a trustee, and each person or partnership having the use or benefit of the property is considered a beneficiary. Where the trust is required to report beneficial ownership information, these are the roles that determine whose details are reported.
The eight exceptions in subsection 150(1.31)
Subsection 150(1.3) does not apply to a trust for a taxation year where any one of the following is met.
(a) Everyone on title is also a beneficiary
Applies where every person considered a beneficiary is also a legal owner of the property, and there are no legal owners who are not beneficiaries. The requirement runs in both directions — so a property held by two spouses who are both beneficially entitled to it can fall within this exception, while adding a third person to title who has no beneficial interest would take it outside.
(b) Related individuals holding a principal residence
Applies where the legal owners are individuals who are related persons, and the property is real property that would be the principal residence of one or more of the legal owners for the year, had they designated it under the Act’s principal residence definition.
This exception is narrower than it first appears, and it is worth reading the conditions closely:
• Every legal owner must be an individual. If a corporation holds any part of the legal title, the exception is not available.
• The legal owners must be related to each other, as that term is defined for these rules (see below).
• The property must be capable of being a principal residence of one of the legal owners for that year. A property held as a rental or an investment generally will not meet this.
• The condition is tested for the year, so a change in ownership or in the use of the property part-way through 2026 may affect the analysis.
A parent added to an adult child’s title where the home is the child’s principal residence is a common arrangement that may fall within this exception. It does not follow that every parent-on-title situation is automatically exempt — the outcome depends on each of the conditions above.
(c) Property held for a spouse or common-law partner
Applies where the legal owner is an individual and the property is real property held for the use or benefit of the legal owner’s spouse or common-law partner during the year, and would be the legal owner’s principal residence for the year if designated. The common case is a family home registered in one spouse’s name while both live there.
(d) Property held for a partnership that files its own return
Applies where the property is held throughout the year solely for a partnership, each legal owner is a partner, and a member of the partnership is required to file a partnership information return covering a fiscal period that includes December 31 of the taxation year.
(e) Property held under a court order
Applies where the legal owner holds the property “as required by an order of a court.”
(f) and (g) Resource-sector and public-sector arrangements
Two exceptions cover specialised structures that will not apply to most individuals or owner-managed businesses: (f) Canadian resource property held for publicly listed corporations or related partnerships, and (g) property held for tax-exempt public bodies using federal or provincial government funds.
(h) Registered securities dealers and regulated trust companies
Applies where the trustee is a registered securities dealer or a regulated trust company acting as an investment entity, the property held is within a defined list of financial assets, and an information return is issued for the trust’s income and gains to all beneficiaries. Whether a particular brokerage or nominee account qualifies depends on all of those conditions being met, not on the account type alone.
How “related” is defined for these rules
A separate provision widens the ordinary meaning. Subsection 150(1.32) states that for the purposes of section 150, a related person “includes an aunt, uncle, niece and nephew,” and that “a person is related to himself or herself.”
The general definition of related persons in the Income Tax Act does not extend to aunts, uncles, nieces and nephews. For these filing rules it does, which widens the range of family arrangements capable of meeting exception (b).
A second list of exceptions, in subsection 150(1.2)
Because subsection 150(1.3) deems the arrangement to be a trust for filing purposes, the general exceptions available to all trusts under subsection 150(1.2) may also apply. These are separate tests in a different subsection, and treating the two lists as one is a common error. An arrangement may fail one and still be released by the other.
Subsection 150(1.2) lists categories of trust the CRA calls listed trusts. Most are specialised — graduated rate estates, regulated and statutory trusts, certain pension arrangements, employee ownership trusts — but three thresholds are directly relevant to family arrangements:
• In existence less than three months. A trust that “had been in existence for less than three months” at the end of the year.
• Assets under $50,000 throughout the year. A trust that “holds assets with a total fair market value that does not exceed $50,000 throughout the year.” The word “throughout” matters: a value above the threshold at any point in the year takes the arrangement outside this exception.
• Assets under $250,000, held by related individuals. Requires that each trustee is an individual, each beneficiary is an individual related to each trustee (or the graduated rate estate of such an individual), and the property does not exceed $250,000 throughout the year, with the only assets held being cash and deposits, guaranteed investment certificates, listed securities, mutual fund shares and units, personal-use property and certain similar holdings.
Three common situations
These are generalised patterns rather than client situations, and each depends on its own facts.
A parent on an adult child’s title. Where every owner is an individual, the owners are related, and the home would be the child’s principal residence, exception (b) may apply. Where a corporation is on title, or the property is a rental, the analysis changes.
A nominee corporation holding title to a rental property. A corporation holding bare legal title for beneficial owners is the kind of arrangement the deeming rule contemplates. The residential exceptions in (b) and (c) are not available where a corporation is the legal owner or the property is a rental, so the analysis turns on whether any other exception is met — exception (d) may assist where the beneficial owner is a partnership that already files an information return.
A joint bank account or an in-trust-for account with a family member. Whether the deeming rule applies depends on whether the account holder is genuinely acting as agent for someone else. Where it does apply, the $50,000 threshold — and in some cases the $250,000 related-individual exception — may release the account, provided the limit is respected throughout the year.
Filing: what and when
The CRA’s rule is that “the T3 return must be filed no later than 90 days after the trust’s tax year-end.” For a December 31, 2026 year end, that is March 31, 2027, which falls on a Wednesday, so no weekend extension applies. Where a due date does fall on a Saturday, Sunday or public holiday recognised by the CRA, a return received or postmarked on the next business day is treated as on time.
Schedule 15 does not accompany every T3 return. Under the CRA’s current guidance, trusts required to file a T3 return, other than listed trusts, must include specified information about each reportable entity on Schedule 15, Beneficial Ownership Information of a Trust. Listed trusts — the categories in subsection 150(1.2) — are not required to include it. The CRA has said it will publish further information about filing for taxation years ending December 31, 2026 ahead of that filing season, so trustees should confirm the Schedule 15 requirement for their own arrangement closer to the deadline.
Preparing a T3 return alongside a trust’s other obligations is part of the firm’s CRA filing services.
Penalties
Two penalties are relevant.
Late filing. Where a T3 return is filed late and no tax was owing at the deadline, the CRA calculates a penalty of $25 for each day the failure continues, with a minimum of $100 and a maximum of $2,500. Where tax was owing, the penalty is instead based on the unpaid amount.
Failure to file or a false statement, in serious cases. For a trust that is not a listed trust, where a return is not filed — or a false statement or omission is made — knowingly or in circumstances amounting to gross negligence, the penalty is the greater of $2,500 and 5% of the highest fair market value of all property held by the trust at any time in the year. There is no maximum.
The CRA has described its approach to these rules as education-first, and has indicated the more serious penalty is reserved for the most significant cases. That is an administrative position rather than a limit written into the legislation.
What the CRA has not yet published
The CRA has stated that further information will be added in advance of the T3 filing season for taxation years ending December 31, 2026. Until that guidance is published, the exceptions have to be read from the legislation as enacted rather than from an administrative summary — which is why an arrangement that looks straightforward is still worth confirming rather than assumed.
This article will be updated when the CRA publishes its guidance.
Frequently asked questions
What happens if an arrangement is set up or ends part-way through 2026? Several exceptions are tested on conditions being met throughout the year, including the $50,000 and $250,000 thresholds. A change in ownership, property use or asset value during the year can affect whether an exception remains available.
If an exception applies, is there anything to do? No return is required under the deeming rule. As a practical matter, a trustee relying on an exception should keep records supporting the exception relied upon — which one applies and the facts behind it — in case the CRA requests them.
Is this the same as the reporting rules for a family trust? No. A family trust is a trust in the ordinary sense and has its own filing obligations. These rules address arrangements that would not otherwise be treated as trusts at all.
What if it is unclear whether the title-holder is acting as an agent? That is the condition the whole analysis turns on, and it is fact-specific. Where it is genuinely unclear, it should be reviewed professionally rather than assumed in either direction.
Confirming which side of the line an arrangement falls on
The more useful question than “who files” is usually “which exception applies here, and what should be kept on file to support it.”
GTA Accounting can review an arrangement, confirm whether a 2026 filing obligation arises and, where it does not, document the exception relied on. Where a filing is required, the firm prepares the T3 return and Schedule 15 where it forms part of the filing.