A reader familiar with these matters has recommended I do this post as the new CRA rules for Bare Trusts are confusing.
Have you added your name to the legal title of your daughter’s new home to help her obtain a mortgage? Or opened an “in trust” bank or brokerage account for your grandson to help fund his education down the road? If so, you have a problem, and these are just two examples of many.
Under new tax reporting rules that apply to years ending after Dec. 30, 2023, you could be liable to a penalty of up to five per cent of the fair value of the home or “in trust” account if you don’t report the arrangement, even if there isn’t a penny of tax owing. The purpose of these rules is to counter tax evasion, money laundering and other criminal activities. Their likely effect will be to put thousands of innocent Canadians on the wrong side of the law.
Additional reading …
Seniors and their families caught up in botched CRA attempt to crack down on tax evasion
The inept launch of new tax-filing rules by the Canada Revenue Agency started with good intentions.
The CRA wants to reduce tax evasion and money laundering. As part of this effort, it’s asking taxpayers this year, for the first time, to provide information on a variety of assets where one person is a beneficiary and another is a trustee who manages things. This could include people who are joint holders of bank or investment accounts with their parents, and were added to help run the accounts.
Can you file a tax return for a bare trust on your own?
Canadians subject to Ottawa’s new trust-reporting rules who don’t already have an accountant or can’t afford professional tax advice face an urgent question: Can regular people, with enough research, fill out the paperwork on their own?
Federal rules aimed at increasing transparency around trusts have introduced new filing and disclosure obligations, including for what’s known as “bare trusts,” which often aren’t documented in writing.
