This article is for informational purposes only and does not constitute tax or financial advice. Consult a qualified accounting professional before making any tax or financial decisions.
Quick answer
- 1For tax years ending on or after December 31, 2026, most bare trusts in Canada must file a T3 return with the Canada Revenue Agency.
- 2Bill C-15, which received Royal Assent on March 26, 2026, created three exemption paths: a $50,000 blanket threshold, a $250,000 related-family threshold for qualifying assets, and an all-on-title or principal-residence carve-out.
- 3A cottage held in a bare trust is generally not exempt under the $50,000 or $250,000 thresholds, because real estate is not on the list of qualifying assets and most cottages exceed $50,000.
- 4The first bare trust T3 returns under the new rules are due March 31, 2027.
Why the bare trust question is back on the table for 2026
If you have spent the past three years hearing that bare trust filing is coming, then paused, then coming again, you are not alone. In 2024, more than 44,000 Canadians filed T3 returns for arrangements as ordinary as a joint bank account with a parent, only for the Canada Revenue Agency to pause the rules days before the deadline.
The rules were paused again for 2024 and 2025, and on December 16, 2025, the CRA confirmed bare trusts would not have to file for the 2025 tax year. That cycle ended on March 26, 2026, when Bill C-15 received Royal Assent and locked in a final set of bare trust rules, including new exemptions, starting with tax years ending on or after December 31, 2026.
This article walks through the four most common bare trust scenarios so you can know, in minutes, whether you need to file. For background on the earlier relief proposals, see our prior coverage.
Quick start: pick your path
Find your situation below to know which section of this article applies to you. Each one-line verdict is a starting point, not the final answer — the deeper sections explain the conditions.
A T3 filing is generally still required. Real estate does not qualify for the $250,000 related-family exemption, and most cottages exceed the $50,000 threshold. Narrow exceptions may apply if every beneficial owner is on title, or if the property is a principal residence.
Typically exempt if the account holds qualifying assets and stays under $50,000 throughout the year, or under $250,000 with all related parties.
Often exempt under the $250,000 related-family threshold, provided the account holds only qualifying assets and all parties are related individuals.
Generally exempt under the principal-residence carve-out for related legal owners, where the property is the child’s principal residence.
What changed under Bill C-15
Bill C-15 amended the Income Tax Act and confirmed a clear framework that survives previous years of confusion. Bare trusts (arrangements where a trustee holds legal title to property but the beneficial owner keeps the rights of use, possession, and control) remain subject to T3 trust reporting for tax years ending on or after December 31, 2026. What is new is the expanded list of “listed trusts” under subsection 150(1.2) of the Income Tax Act, which can claim exemption from the T3 return, the beneficial ownership Schedule 15, or both.
Three exemption paths matter most for individuals and family-owned arrangements. The first is a $50,000 blanket threshold that applies to any trust holding $50,000 or less in total assets throughout the tax year, with no restriction on asset type. The second is a $250,000 related-family threshold that applies only to specific low-risk asset types. The third is a structural carve-out that exempts arrangements where every beneficial owner is also a legal owner, or where the property is a principal residence of at least one related legal owner.
For context on how these changes interact with broader trust filings, see our overview of the broader family trust filing rules.
Compare the exemption thresholds
| Feature | $50,000 blanket | $250,000 related-family | All-on-title carve-out |
|---|---|---|---|
| Asset-value cap (FMV throughout the year) | $50,000 | $250,000 | No dollar cap |
| Asset-type restriction | None — any asset type | Cash, GICs, mutual funds, segregated funds, listed securities, personal-use property, certain life insurance | None — any asset type |
| Relatedness required | No | Yes — all trustees and beneficiaries must be related individuals | No, but principal-residence variant requires related legal owners |
| Real estate eligible | Yes if under $50,000 (rare) | No | Yes, if every beneficiary is also a legal owner |
| T3 return still required | Generally no | Generally no | Generally no |
| Best-fit scenario | Small in-trust-for accounts | Family joint bank accounts | Joint properties where everyone is on title |
For arrangements involving real estate specifically, our guide to residential real estate held in trust covers the tax mechanics in more detail.
The cottage scenario, explained
The first structural path is the all-on-title carve-out. If every person who has beneficial ownership of the cottage is also on the legal title — and no titleholder is excluded from the benefit — the arrangement may not be treated as a separate trust at all. A common pattern that fails this test is a parent on title for a cottage that is actually for the children’s use.
The second is the principal-residence variant: if all legal owners are related individuals (parents, children, siblings, and certain extended family) and the cottage qualifies as a principal residence for at least one legal owner, the arrangement may be exempt. For Ontario trustees, keep your Land Transfer Tax records and beneficial-ownership documentation together. For the mechanics of filing when required, see how to actually file a T3 return.
Step-by-step: how to test your bare trust
Use this five-step check before the March 31, 2027 deadline. Each step builds on the one before it, and you should document your answer at every stage even if you conclude no filing is required.
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1
Confirm you actually have a bare trust The Income Tax Act does not define bare trust precisely, but the CRA treats an arrangement as a bare trust where the trustee (legal owner) acts only as an agent for the beneficial owner, with no independent power to deal with the property.
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2
Inventory and value the trust assets Calculate fair market value (the price the asset would sell for between unrelated parties) at every point during the year. The exemption tests apply throughout the year, not just on December 31.
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3
Map legal owners and beneficial owners List every person on title or registered as legal owner, then list every person with beneficial ownership. The overlap and the relationships between them determine which exemption you can use.
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4
Apply the exemption tests in order Start with the all-on-title carve-out, then the $50,000 blanket, then the $250,000 related-family threshold. The first one you pass is the one you rely on.
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5
Keep records even if exempt The CRA may request documentation, and our guide to CRA audit-defence record-keeping covers what to preserve.
Common mistakes Ontario trustees make
These are the recurring errors we see when individuals and families try to apply the bare trust rules on their own. Reviewing them early can save a costly correction or amended filing.
- →Assuming a family cottage qualifies under the $250,000 related-family threshold. Real estate is not on the list of qualifying assets for that exemption, so the dollar test is irrelevant if real property is involved.
- →Treating an in-trust-for account as automatically exempt. The account must stay under the applicable threshold throughout the year and hold only qualifying assets to claim the $250,000 path.
- →Forgetting the “throughout the year” fair-market-value test. A trust that touches the threshold even briefly during the year may lose the exemption for the entire year.
- →Confusing “related” with the Income Tax Act definition. The ITA has a specific list of related individuals that may not match how most families use the word.
- →Missing the distinction between T3 exemption and Schedule 15 exemption. A trust can owe one filing and be exempt from the other.
- →Skipping records because no filing is required. The CRA can request documentation years later, and a clean record set is your strongest defence — see our guidance on preparing for a CRA audit.
Frequently asked questions
Do I have to file a T3 return for a cottage that’s in my name but really belongs to my kids?
I’m joint on my mother’s bank account so I can pay her bills — does that count as a bare trust?
I opened an in-trust-for investment account for my grandson years ago. Do I need to file something now?
I co-signed my daughter’s mortgage and I’m on title. Is that a bare trust that needs a T3?
What happens if I miss the March 31, 2027 deadline for my bare trust?
If my trust is exempt, do I still need to keep records or notify the CRA?
What’s the difference between being exempt from the T3 and being exempt from Schedule 15?
Not sure if your bare trust needs to file?
ClearWealth’s trust filing team handles the determination, the T3 return, and the Schedule 15 disclosure together. If you are uncertain whether your arrangement needs to file by March 31, 2027, book a consultation and we will work through it with you.
Book a ConsultationSources & References
- ·Canada Revenue Agency — Enhanced reporting rules for trusts and bare trusts FAQ
- ·Canada Revenue Agency — What has changed: Filing a trust’s T3 return
- ·Canada Revenue Agency — T3 Trust Guide 2025 (T4013)
- ·Parliament of Canada — Bill C-15, Budget Implementation Act, 2025
- ·Department of Finance Canada — Budget 2025 confirmation of bare trust deferral
