https://www.canada.ca/en/reven.../t3-trust-guide.html

This is now mandatory, starting from this year.

Examples of bare trusts that may trigger a tax filing requirement:

• Aging parents that have added a family member such as an adult child to the title of the family home to ease the future transfer of the property and avoid probate tax
• Aging parents that have added an adult child to their bank and/or investment accounts to help with bill payments and other transactions
• Parents that have added their names to the title of their child’s home to help them qualify for a mortgage
• Parents that have opened bank accounts for minor children
• Holding In Trust For (ITF) investment accounts for children, grandchildren, etc.

Example #1: Don is not sure whether the new rules require him to file trust returns because there is no income generated in any of the current arrangements he is the trustee of. A couple of years ago his parents added him to the title of their home and they set up a trust arrangement to hold the family cottage which Don is the trustee of.

Even though there is no taxable income to report, under the new rules Don must file trust returns as well as additional information regarding all reportable entities which include himself as trustee, beneficiaries and settlors. The additional information must be provided on Schedule 15 and be filed along with a T3 return. He must include full names, type of entity, dates of birth, tax identification numbers (such as a social insurance number), addresses and everyone’s country of residence.

Many trustees who have never had to report a trust disclosure before can easily be unaware of their new trust reporting obligations. Even though no taxes are owed for many bare trust arrangements, the new rules create an administrative burden so its important to consult with a tax professional to ensure you are meeting all of your trust reporting obligations because the April 2 deadline is approaching quickly.

Failure to file a trust return incurs penalties of $25 per day, ranging from $100 to $2,500. Knowingly failing to file results in an additional penalty of 5% of the maximum property value held during the year or a minimum $2,500, alongside existing T3 return penalties which can be significant and should be taken seriously.