Under the new reporting obligations, trustees of T3 trusts are required to provide detailed information about the trust, its beneficiaries, income, and distributions. There are significant penalties for non-compliance and there is a significant expansion of those required to file, specifically in relation to BARE TRUST relationships.

It is important for trustees of T3 trusts to understand and comply with the new reporting obligations to avoid penalties and potential legal consequences. They should carefully gather and provide all necessary information required by the T3 Trust Report to fulfill their reporting obligations accurately and in a timely manner.

Who has to file?

• You have a trust that is not exempt from filing this year (see exemptions below).
• You filed a UHT return because you had a bare trustee relationship.
• You have a bare trust which is basically your name on any asset that someone else benefits.

What are some examples of Bare Trusts?

• a parent is on title of a child’s home (without the parent having beneficial ownership) to assist the child in obtaining a mortgage;

• a parent or grandparent holds an investment or bank account in trust for a child or grandchild (if less than $50,000 in Fair Market Value throughout the year there may be an exception - see exceptions below)

• one spouse is on title of a house or asset although the other spouse is at least a partial beneficial owner;

• a child is on title of a parent’s home (without the child having beneficial ownership) for probate or estate planning purposes only;

• a child is on parent’s financial accounts (or other assets) to assist with administration after the parent’s passing;

• a corporate bank account is opened by the shareholders with the corporation being the beneficial owner of the funds;

• a corporation is on title of an individual’s real estate, vehicle or other asset, and

  vice-versa;  (if you filed a UHT return due to a bare trustee structure this will catch you)

• assets registered to one corporation but beneficially owned by a related corporation;

• use of a nominee corporation for real estate development / holding purposes;

• a partner of a partnership holding a bank account or asset for the benefit of all the other partners of a partnership;

• a joint venture arrangement where the operator holds legal title to development property as an agent for the benefit of other participants;

• a cost-sharing arrangement where a person holds a business bank account, or other assets, to facilitate the arrangement while having no, or only partial, beneficial interest in these shared assets;

• a property management company holding operational bank accounts in trust for their clients, or individuals managing properties for other corporations holding bank accounts for those other corporations; and