Bare trust? You might have seen this term pop up a lot lately (and probably skipped right past it).
After three years of delays, the new CRA bare trust rules are now final, and some bare trusts will have to file a tax return for the first time, starting with the 2026 tax year.
If you’ve never set up a trust, this may feel like something that doesn’t apply to you. Maybe it doesn’t. But most people who have a bare trust never actually set one up.
Usually, someone’s name goes on a land title or a bank account for a practical reason (the bank asked for it, or it just made things easier at the time), and nobody thinks about it again.
A lot of our clients at RMI LLP, a Calgary-based CPA firm, own real estate, so we wanted to explain what a bare trust actually is, what it can look like in real life, and what the new rules may mean for you.
In this post:
- A bare trust is when one person or company is on the title for an asset, but someone else is the real owner.
- After three years of delays, the new CRA rules are now law. Bare trusts that aren’t exempt must file a T3 return with Schedule 15 for the 2026 tax year, due March 31, 2027.
- Many everyday family situations are exempt, including arrangements that stay at $50,000 or less all year and parents on a child’s home title (as long as the child is also on title and lives there).
- Numbered or nominee companies holding real estate for someone else, and companies holding title for unrelated investors, will most likely need to file.
- Penalties start at $25 per day (up to $2,500) and can be much higher for gross negligence.
- Real-life examples, what’s exempt, and a quick checklist to see if it applies to you
What is a bare trust in Canada?
A bare trust is when the name on the paperwork and the real owner of an asset are not the same person (or company).
It’s a bit like holding a parcel for your neighbor. It’s in your hands, but it’s not yours, and you’ll hand it over whenever they ask. With a bare trust, the parcel is a property or an account, and the real owner is whoever paid for it, keeps the profits, and makes the decisions.
So there are two sides to it:
- Legal titleholder (the bare trustee): the name on the land title, registration, or account. They don’t make any decisions on their own and simply follow the real owner’s instructions.
- Beneficial owner: the person or company who paid for it, gets the income (and the losses), and owns the actual value.
If the person on title does have real decision-making power, it’s not a bare trust anymore. That would be a regular trust, which comes with its own set of rules.
What does a bare trust look like in real life?
It’s probably easier to show than to explain, so here are three common examples.
Example 1: The numbered company on the land title
The setup: Your operating company buys a commercial building in Calgary. For liability, privacy, or financing reasons, a separate numbered company (also called a nominee corporation) goes on the land title instead.
The reality: That numbered company has no employees and no bank balance, and it doesn’t really do anything. Your operating company paid for the building, collects the rent, pays the mortgage, and reports the income.
Why it’s a bare trust: The numbered company holds the title, but your operating company owns the building. This is also the setup most likely to need a filing for 2026.
Example 2: Helping your kid get a mortgage
The setup: Your adult child is buying their first home, but the bank won’t approve the mortgage on their income alone. So you go on the mortgage and the land title to get it approved.
The reality: You don’t live there, you didn’t pay the down payment, and you’re not making the monthly payments. When the home is sold one day, you won’t see any of that money either. It’s your child’s home in every way except on paper.
Why it’s a bare trust: On paper, you own part of the home. In real life, you’re only there to keep the bank happy. The good news is that this one is generally exempt under the 2026 rules (more on that below).
Example 3: Three partners, one name on title
The setup: Three business partners buy a development lot together. Instead of putting all three names on the land registry (and updating it every time ownership percentages change), they put the title under one managing company.
The reality: That company signs a side agreement saying it holds the land on behalf of all three partners, based on their ownership percentages.
Why it’s a bare trust: The company on title is holding the land for the real owners. When a corporation holds title for unrelated partners like this, it will most likely need to be reported.
Is a bare trust a tax loophole?
Not at all. A bare trust doesn’t save anyone tax. The CRA looks right through it, so 100% of the income, expenses, and capital gains are taxed in the hands of the real owner.
So the tax bill itself isn’t changing. What’s changing is the paperwork.
People usually end up with a bare trust for very practical reasons:
- Privacy: keeping personal or company names off public property records
- Simpler property deals: one company holds the title for several investors or partners
- Lender requirements: the bank needs a co-signer to approve the mortgage
- Estate planning: an adult child is added to a parent’s home title to help with probate
When is it not a bare trust?
When the paperwork matches real life. If your operating company buys a building, puts its own name on title, uses the building, and collects the rent, that’s simply a company asset. No bare trust and no extra filing.
What are the CRA bare trust rules for 2026?
After a few years of back and forth, the rules are finally law (Bill C-15 passed on March 26, 2026). Here’s where things landed:
| Tax year | Do bare trusts file? |
|---|---|
| 2023, 2024, 2025 | No, unless the CRA sends you a direct request |
| 2026 | Yes, if the arrangement isn’t exempt. First T3 and Schedule 15 due March 31, 2027 |
Schedule 15 is the part that may take the most time. It asks for names, addresses, dates of birth, tax residency, and tax ID numbers for everyone involved: the name on title, the real owners, and anyone who can influence decisions.
If you’d like to see more on how trusts are taxed and filed, the CRA has it all on its trust income tax page.
If there are several partners (or someone lives outside Canada), collecting all of this can take a while, so starting before year-end is probably a good idea.
What is exempt from bare trust reporting?
The good news is that many everyday family situations are now exempt. You generally don’t need to file if:
- The total value stays at $50,000 or less for the whole year. This applies to any type of asset. Just keep the timing in mind: if an account starts the year at $45,000 and ends it at $60,000, it doesn’t qualify.
- Everyone on title is also a real owner (and the other way around). This covers most joint accounts between spouses and true joint ownership.
- Family members are on a home title. Everyone on title is a related individual, and the property could be a principal residence for one of them. This is the mortgage example above.
- Small family arrangements up to $250,000. Everyone involved is a related individual, and the assets are low-risk ones like cash, GICs, and publicly listed investments (real estate doesn’t count here).
- A general partner holds partnership property, and a partnership information return (T5013) is filed.
- The arrangement lasts less than three months, for example a property held for someone while a deal closes.
What still has to be reported?
You will likely need to file a T3 return with Schedule 15 for 2026 if you have:
- A nominee or numbered company holding commercial or residential real estate for another person or company
- A company holding title for a joint venture, development, or co-ownership deal between unrelated partners
- Any other asset in one name that really belongs to someone else, where none of the exemptions apply (for example, an adult child on title for a parent’s rental property)
What are the penalties for not filing a bare trust return?
If a return is filed late, the penalty is $25 per day, with a minimum of $100 and a maximum of $2,500 per return. And that’s even if there’s no tax owing.
If the CRA decides the return was skipped on purpose or through gross negligence, it can add another penalty: the greater of $2,500 or 5% of the highest value of the property during the year. On a $2 million building, that could be up to $100,000 (for a form you maybe didn’t even know existed).
Quick checklist: could you have a bare trust?
A few questions worth asking yourself:
- Is a numbered or nominee company on the land title for a property that your operating company (or a group of investors) actually owns?
- Is your name on a property, vehicle, or account that really belongs to someone else or to another company?
- Is someone else’s name on something that’s really yours?
- Are you part of a joint venture or development where one company holds title for everyone?
If any of these sound familiar, it’s probably worth taking a closer look before December 31, 2026.
Bare trust FAQ
What is a bare trust in simple terms?
It’s when one person or company is on the legal title for an asset, but someone else is the real owner who gets the benefits and makes the decisions.
Do bare trusts have to file a T3 return for 2026?
Yes, unless an exemption applies. Bare trusts that aren’t exempt need to file a T3 return and Schedule 15 for tax years ending December 31, 2026. The deadline is March 31, 2027.
Do bare trusts have to file for 2025?
No. Bare trusts don’t need to file for 2023, 2024, or 2025, unless the CRA sends a direct request.
Is a parent on a child's mortgage a bare trust?
Often, yes. But it’s generally exempt from filing if everyone on title is a related individual and the home could be a principal residence for one of them.
Does a nominee corporation have to file a bare trust return?
In most cases, yes. A nominee corporation holding real estate for another person or company doesn’t fit the family exemptions and is usually worth more than $50,000.
What is the penalty for not filing a bare trust return?
$25 per day, with a minimum of $100 and a maximum of $2,500. Gross negligence can add the greater of $2,500 or 5% of the property’s highest value during the year.
Not sure where your setup lands?
Whether something counts as a bare trust really comes down to the details: who’s on title, who the real owners are, and what everything is worth during the year.
If any of the checklist questions sound familiar, our team at RMI LLP can look at your setup with you and let you know if a filing is needed.
Start with a consultation today!
