New Trust Reporting Requirements: What You Need to Know

What if a simple change to your bank account or property title suddenly required you to file a tax return? 

Many Canadians are unaware that new trust reporting rules now require all express trusts—including bare trusts—to file tax returns, even if they were previously exempt. 

This means that trusts that were never considered taxable before now have strict filing requirements. So, does this impact you? And if so, what steps should you take to stay compliant? 

Let’s break it down. 

What Changed? The New Trust Filing Rules for 2023 

Previously, many trusts—including inactive ones—did not need to file tax returns. However, starting with the 2023 tax year, all express trusts must now file a return and disclose detailed information about trustees, beneficiaries, and other involved parties. 

So, what exactly is an express trust? 

This category includes formal trusts that were intentionally created, such as: 

• Family Trusts – Often used for estate planning and tax efficiency. 

• Alter Ego or Joint Partner Trusts – Common among retirees for probate planning. 

But there’s one type of trust that many Canadians don’t even realize they have—and it’s now required to file. 

Do You Have a Bare Trust Without Knowing It? 

A bare trust is different from a formal trust because it often happens accidentally. It exists when one person holds legal title to an asset on behalf of another person, even if there is no formal trust agreement. 

You may have a bare trust without realizing it if you: 

• Added a child’s name to your real estate title to simplify estate planning. 

• Are on a parent’s bank or investment account to help manage finances. 

• Added a parent to your property title to secure mortgage financing. 

• Transferred ownership of real estate to a corporation as part of a business restructuring. 

• Own property through a joint venture or partnership, but the legal title is in one person’s name. 

If any of these apply to you, your trust is now subject to Canada’s new reporting requirements—even if it has no income, no trust agreement, and no tax liability. 

What Information Needs to Be Reported? 

Along with filing a tax return, all trusts must now provide detailed personal and financial information about: 

• Trustees 

• Beneficiaries 

• Settlors (those who contributed assets to the trust) 

• Any individual who can control trustee decisions, such as a protector 

The required details include: 

• Full legal name 

• Address 

• Date of birth 

• Country of residence 

• Taxpayer identification number (SIN, trust account number, business number, or foreign tax ID) 

This level of disclosure means many families and businesses will need to rethink how they structure their trusts. 

When Is the Trust Tax Return Due? 

Most trusts follow a December 31 year-end, which means the first filing deadline under the new rules is March 30, 2024. 

If your trust has a different year-end, the return is due 90 days after the fiscal year-end. 

But what happens if you miss the deadline? 

The Cost of Non-Compliance: Penalties for Late Filing 

Failing to comply with the new rules can result in costly penalties: 

• $25 per day late, up to a maximum of $2,500 per year. 

• For gross negligence, the penalty increases to the greater of $2,500 or 5% of the highest fair market value of trust assets. 

This means even an inactive trust with no taxable income could face serious fines for failing to file. 

What Can You Do to Reduce Your Trust Reporting Obligations? 

To avoid unnecessary filings in the future, consider: 

• Reviewing existing trusts – If a trust is no longer serving a purpose, winding it down could eliminate future filing requirements. 

• Closing inactive in-trust accounts – Even accounts with no activity are subject to reporting. 

• Restructuring beneficiaries – If certain beneficiaries are no longer necessary, removing them may simplify reporting. 

However, even if you dissolve a trust in 2024, you still need to file a return for the 2023 tax year. 

Do You Need to File? Take Action Now 

If you’re unsure whether these new trust reporting rules apply to you, now is the time to get expert guidance. 

At GYTD CPA Professional Corporation, we help individuals, families, and businesses navigate these complex tax changes and ensure full compliance with Canada’s new trust regulations. 

Think you might have a bare trust? Don’t wait until it’s too late. Contact GYTD CPA Professional Corporation today to discuss your next steps.