New Reporting Requirements for Bare Trusts

TUESDAY, OCTOBER 24, 2023 

If you, or entities that you manage, hold assets on behalf of others you must consider the new bare trustee filing requirements. Most commonly these arrangements exist in real estate ownership where bare trust corporations are formed to take title of real estate that is being held for the benefit of multiple owners.  However, bare trusts can exist in a wide range of situations where one co-owner take title on behalf of multiple owners.

What are the New Compliance Rules?

Previously, a bare trust did not have to file a T3 trust return. However, under the new rules, a bare trust must now file an annual T3 for years ending on or after December 31, 2023. Since a bare trust is deemed to have a December 31st year-end, all bare trusts will have to file for the 2023 year with the filing due March 31 2024.

There are also additional disclosure requirements for the settlor(s)/beneficiary(ies) and the trustees. The T3 must provide the following for each settlor/beneficiary and trustee:

-        Name;

-        Address;

-        Date of birth (individuals)

-        Jurisdiction of residence;

What are the Penalties for Non-compliance?

-        A penalty equal to the lesser of $25/day unfiled, with a minimum penalty of $100 and a maximum of $2,500.

-        If failure to file was done intentionally or due to gross negligence, an additional penalty equal to 5% of the maximum fair market value of property held during the relevant year by the trust will apply, with a minimum penalty of $2,500.

If you have further questions or concerns about potential T3 filings the professionals at RMR are here to help.