Here’s a bombshell for taxpayers and professionals alike: the Canada Revenue Agency (CRA) has confirmed that bare trusts are off the hook for filing in the 2025 tax year. But here's where it gets controversial—this decision comes after months of confusion and debate over what exactly constitutes a bare trust and who should be subject to the expanded trust reporting rules. Let’s break it down in a way that even beginners can grasp, while diving into the details that have everyone talking.
Earlier this month, the CRA issued an update following the second reading of Bill C-15 in the House of Commons. This bill proposes exemptions for bare trusts from the expanded trust reporting requirements, which were initially designed to combat tax evasion by demanding detailed beneficial ownership information. The House is now adjourned until January 26, leaving many to wonder what’s next. And this is the part most people miss—while the rules were technically effective for the 2023 tax year, bare trusts were granted a last-minute exemption due to widespread confusion. Sound familiar? It’s a pattern that’s left taxpayers and professionals scratching their heads.
Ryan Minor, tax director with CPA Canada, summed it up perfectly: ‘Budget 2025 essentially kicked the can down the road to 2026.’ The budget confirmed that bare trusts wouldn’t need to file until the 2026 tax year, but Minor emphasized the need for clarity. ‘We wanted that assurance,’ he said. ‘We didn’t want to be caught off guard again.’ This delay highlights the complexity of the issue—bare trusts, often found in co-signed mortgages or joint bank accounts, are so common that many taxpayers don’t even realize they’re involved in one.
Here’s where it gets even more contentious: Bill C-15 includes specific exceptions that narrow the scope of affected arrangements. For instance, if a parent co-signs a mortgage for their child’s principal residence, that scenario is explicitly exempt from the enhanced reporting rules. Emily Mantle, founder of Compass CPA, notes that while this exception is ‘narrow and fact-specific,’ it’s a welcome clarification for a common situation. But what about other parent-child real estate deals? They might not be so lucky, leaving room for debate about fairness and consistency.
The proposed legislation also exempts certain low-value trusts and those holding specific asset types, like cash, GICs, or mutual funds. For example, if an adult child is added as a joint owner of a parent’s bank account to help manage finances, that arrangement would likely be exempt. But here’s a question to ponder: Why isn’t there a clear valuation rule for life insurance policies under the $50,000 blanket exemption? Florence Marino of Tompkins Insurance Services points out this oddity, suggesting the rules still have gaps that need addressing.
Another hot-button issue is the exception for securities issued in nominee name. Bill C-15 proposes that these arrangements, which often involve securities dealers or custodians acting as trustees, be exempt from filing—provided income and gains are reported to beneficiaries. The Canadian Forum for Financial Markets (CFFiM) applauds this move, arguing it reduces compliance costs. But they’re pushing for more, suggesting there’s no logical reason to limit the types of assets held in exempt bare trusts. Is this a step too far, or a necessary simplification? Let us know what you think in the comments.
Looking ahead to the 2026 tax year, Mantle highlights scenarios where filing may still be required, such as nominee arrangements for rental properties or corporate trust structures. For professionals, this means now is the time to identify these arrangements and assess their compliance obligations. Minor adds that the complexity of the rules demands better guidance from the CRA. ‘It’d be nice to have clear examples of what’s expected—and what’s not,’ he said.
The fallout from the 2023 filing debacle is still fresh. Despite the exemption, 52,000 bare trust returns were filed, leading to a review by the Taxpayer’s Ombudsperson. The report criticized the CRA’s communication failures and recommended improvements, including the possibility of a simplified filing form for bare trusts. Here’s a bold idea: If the filing questions for taxable trusts don’t apply to bare trusts, why not create a tailored form to ease the burden? It’s a suggestion that’s gained traction, but the CRA says it’s waiting for legislative certainty before moving forward.
In the end, the government’s goal is clear: balance transparency with practicality. But as the rules continue to evolve, one thing is certain—this conversation is far from over. What’s your take? Are the exemptions too narrow, too broad, or just right? Share your thoughts below and let’s keep the discussion going.
