The New Trust Filing Requirements and Fishers

There has been many questions about the new legislation and new filing requirements around something called a Bare Trust.  Essentially, this new legislation is wide spread and is making certain situations on how an asset is held to become reportable and the need to file a T3 information tax return.

The big catch is the potential penalties that can be assessed if the T3 information return is not filed.  The penalties are severe, 1% of the fair market value of the asset.

For Fishers, there are two primary types of assets that should be reviewed to determine if you need to file an information return to avoid penalties.  The good news is that these penalties are not applicable for the first year of filing, which is for 2023.  However, if CRA determines negligence in filing, the penalties can still apply.  So in the end, you want to determine if you have a filing requirement or not and get these return filed before the end of 2024.

The first situation is how your Commercial Fishing Licenses are held.  If you hold you license in your personal name and have a Corporation which you operate your fishing activities through, holding the license personally is considered a Bare Trust and requires a T3 tax return to be filed.  You want to review this situation as soon as possible to determine your filing requirements.

The second situation that is captured under these new rules is if you have an “In Trust” bank or investment account with your children or your parent.  If the value of these types of accounts exceed $50,000 in value, then there is a filing requirement under the new Bare Trust rules.  This situation can extend as well to having your name included on a physical property of a child or parent.

This new legislation that CRA has implemented in complex and CRA keeps providing more information about the filing process during the time in which these returns should be prepared and process.

While there is penalty relief for 2023 filings, it is important to determine your filing requirements and get them done prior to the end of 2024, so there is no room for interpretation from CRA on your filing.

You should be talking with your Tax Professional as soon as possible about these new rules or feel free to contact me to discuss this issue.

Until next time,