New Trust Reporting Rules – A Complete Guide by a Montreal CPA Firm Near You

Introduction

Canada’s trust reporting landscape has changed dramatically. Beginning with the 2023 tax year, the federal government introduced new trust reporting rules that require many trusts—including simple, dormant, or bare trusts—to file a T3 Trust Income Tax and Information Return for the first time. These rules were designed to increase transparency, prevent tax evasion, and allow CRA to track beneficial ownership more effectively. However, the new requirements have caught thousands of Canadians off guard, especially those who never realized they were part of a trust relationship. Failure to comply can lead to significant penalties. This guide explains everything you need to know about the new rules.

Legal and Regulatory Framework

The changes come from amendments to section 150 of the Income Tax Act and the new Schedule 15 of the T3 return. Trusts that previously had no income or activity are now required to file unless they meet a narrow list of exemptions. Every affected trust must disclose detailed information about the: settlor, trustees, beneficiaries, and persons with the ability to control or influence trustee decisions. CRA requires full legal names, addresses, dates of birth, residency, and taxpayer identification numbers. These rules apply to inter vivos trusts, testamentary trusts, family trusts, and many bare trusts, including those used for real estate and bank accounts.

Key Court and Administrative Considerations

Although the rules are new, early disputes have centered around whether certain arrangements qualify as trusts. CRA administrative guidance confirms that bare trusts—where a trustee holds property for a beneficiary with no independent decision-making power—are included unless specifically exempt. While major court cases have not yet developed, CRA expects full compliance and has issued warnings about penalties for failure to file. The courts have historically prioritized substance over form in evaluating trust arrangements.

Why These Rules Matter

Under the new rules, many Canadians must now file T3 returns even when: no income was earned, no activity occurred, or the trust was created informally (e.g., a parent added to title for refinancing). CRA seeks transparency around beneficial ownership to combat tax evasion, money laundering, and hidden wealth transfers. These rules impact families, real estate owners, small businesses, and even informal financial arrangements.

Examples of Trusts Now Required to File

1. Bare Trusts for Real Estate

Parents or children added to title solely for mortgage purposes.

2. Bare Trusts for Bank or Investment Accounts

Someone holding an account for another person.

3. Joint Accounts With Beneficial Ownership Differences

A parent and adult child sharing an account where funds belong to only one party.

4. Family Trusts and Inter Vivos Trusts

Most already filed T3s—now require expanded reporting.

5. Testamentary Trusts

Created through wills and continuing after death.

6. Holding Companies With Trust Arrangements

Where shares are held for beneficial owners.

Who Is Exempt From Filing

Certain trusts are exempt, including: mutual fund trusts, segregated fund trusts, graduated rate estates (GREs), qualified disability trusts (QDTs), registered plans (RRSP, RRIF, TFSA, RESP, RDSP), and trusts that existed for less than three months or held assets worth less than $50,000 (under strict conditions). However, most bare trusts do not meet these exemptions, making compliance mandatory for a wide audience.

Information Required Under the New Rules

Trusts must now disclose: settlor identity, trustee information, beneficiary details, controlling persons (protectors or individuals influencing trustee decisions), tax residency of each party, SIN/ITN/BN numbers, dates of birth for individuals, trust deed or declaration details, and ownership information for all property held in trust. This transparency gives CRA deep insight into ownership structures and wealth transfer patterns.

Penalties for Non-Compliance

Penalties for failing to file or for incomplete disclosure are severe: $25 per day (minimum $100, maximum $2,500) for a late T3 return, and for gross negligence, the greater of $2,500 or 5% of the highest fair market value of assets held during the year. This can result in major penalties for trusts holding real estate or investments.

Mackisen Strategy

At Mackisen CPA Montreal, we help clients identify whether they are part of a trust arrangement, determine filing obligations, prepare T3 returns with Schedule 15, gather beneficiary and trustee information, organize documentation, and respond to CRA review letters. We also help restructure arrangements where possible to reduce ongoing reporting complexity. Our team ensures accuracy, compliance, and full protection against penalties.

Real Client Experience

A Montreal family who added a child to title for mortgage purposes unknowingly created a bare trust and faced potential penalties; we filed the T3 and corrected ownership records. A client with a dormant family trust had no activity for years but was now required to report; we prepared complete filings and avoided penalties. A rental property held jointly with a sibling required reporting under the new rules, and we reconstructed beneficiary information to comply. A business owner discovered his holding company structure involved a bare trust; we ensured proper filings and documentation.

Common Questions

Is a bare trust always required to file now? Yes—unless it meets a very narrow exemption. Do I need a lawyer to identify trust status? A CPA can usually determine structure; legal input is needed only for complex cases. Does CRA review these filings closely? Yes—new rules mean higher scrutiny. What if I missed last year’s filing? You may still be able to file late and request penalty relief.

Why Mackisen

With more than 35 years of combined CPA experience, Mackisen CPA Montreal ensures full compliance with Canada’s new trust reporting rules. Whether your trust is simple, complex, formal, or informal, we protect you from penalties and provide complete, accurate T3 reporting.