If your corporate structure includes a family trust, a holding trust, or even an informal arrangement where one person holds an asset for another, a new federal reporting regime is about to require far more of you than it ever has. Canada's enhanced trust reporting rules apply starting with the 2023 tax year — meaning the first returns under the new regime land in early 2024 — and they sweep in arrangements that have historically never filed at all, including bare trusts. For BC business owners who have used trusts for income splitting, succession, or asset protection, this is the year to inventory every arrangement before the deadline finds you unprepared.
The stakes are not theoretical. The new rules pair expanded disclosure with materially larger penalties, and they reach trusts that many owners do not even think of as trusts. The work to get ready is straightforward, but it is not optional, and it benefits from starting now rather than in the filing crush.
What is changing, and when?
The enhanced reporting rules were enacted through Bill C-32 and apply to trust taxation years ending after December 30, 2023. For a trust with a December 31 year-end — which most are — that means the 2023 tax year, with the T3 return generally due 90 days after year-end (around the end of March 2024).
Two things are genuinely new:
- Many more trusts must file a T3 return. Previously, a trust with no income, no tax payable, and no distributions often did not have to file. Under the new rules, most express trusts must file annually regardless of activity. A trust holding a single dormant asset and earning nothing still has to file.
- A new Schedule 15 demands beneficial ownership detail. Filing trusts must complete Schedule 15, disclosing the identity of all trustees, beneficiaries, settlors, and any "controlling persons" — anyone who can exert influence over trustee decisions, such as a protector. For each, you report name, address, date of birth, jurisdiction of residence, and tax identification number (SIN, business number, or trust account number).
The policy intent is transparency: giving the CRA comprehensive beneficial-ownership information to support tax integrity and anti-money-laundering objectives. The practical effect for owners is that arrangements which used to operate quietly now require formal, detailed, annual disclosure.
The bare-trust surprise
The provision catching the most BC owners off guard concerns bare trusts. A bare trust exists where one party holds legal title to an asset purely for the benefit of another, with no independent discretion — the trustee simply holds. These arrangements are common and often undocumented. Examples I see regularly in BC:
- A parent on the title of an adult child's property to help with mortgage qualification.
- A corporation holding a property "in trust" for the real beneficial owner.
- One shareholder holding shares or a bank account on behalf of others.
- A nominee corporation holding real estate for a partnership or joint venture.
Under the enhanced rules, bare trusts can be required to file a T3 and Schedule 15 even though they have no income and no tax. Most people involved in these arrangements have never filed anything and do not think of themselves as trustees at all. That is exactly the gap the new regime is designed to close — and exactly where unprepared owners are most exposed.
(A note on how this played out: the bare-trust requirement proved so disruptive that the CRA ultimately granted late relief for the 2023 year. But that decision came at the very end of the cycle. Building your inventory now is the right posture regardless of where relief eventually lands.)
Why the penalties demand attention
The reason to treat this seriously is the penalty structure. Beyond the standard late-filing penalty, the rules introduce an additional penalty for failure to file equal to 5% of the maximum fair market value of the trust's property during the year, with a minimum of $2,500, where the failure is made knowingly or through gross negligence.
That 5% framing is what changes the calculus. Consider a worked example.
A worked example: small trust, large exposure
Scenario A — The Harbour Family Trust holds a BC rental property with a fair market value of $1,400,000 and a modest investment account. It earns rental income, has always filed a T3, and the owner's advisor adds Schedule 15, gathers beneficiary details, and files on time. Compliance cost: a few hours of professional time, perhaps $1,500 to $2,500 in fees. No penalty.
Scenario B — A bare trust that the same owner forgot about: years ago, the owner's holdco was placed on the title of a $900,000 property it holds purely for a related party. No income, no tax, never filed — "it's just on title." Under the new rules this is a reportable trust. If the failure to file is treated as gross negligence, the gross-negligence penalty could reach 5% of $900,000 = $45,000.
Same family, same year. The filed family trust costs a couple of thousand dollars in fees. The forgotten bare trust carries a potential $45,000 penalty — not because tax was owed, but purely because a return was not filed. This is the entire point: under the new regime, the cost of not knowing about a trust dwarfs the cost of complying with one.
What BC owners should do now
The right response is an inventory, not a panic. Work through this sequence:
- List every trust you can name. Family trusts, alter-ego or spousal trusts, employee trusts, any "in trust for" arrangement.
- Hunt for the hidden ones. Review property titles, share registers, and bank accounts for situations where legal title and beneficial ownership diverge. Ask: is anyone holding something for someone else? Those are your candidate bare trusts.
- Gather beneficial ownership data early. Schedule 15 needs full identifying details — names, addresses, dates of birth, and tax numbers — for trustees, beneficiaries, settlors, and controlling persons. Collecting SINs from extended family takes time and tact; start before the deadline.
- Document the structure's purpose. This is a natural moment to confirm each trust still serves a real planning objective. If a trust has outlived its purpose, wind it down deliberately.
- Decide who files what. Map each trust to a filer and a deadline so nothing falls between advisors.
The owners who will sail through are not the ones with the simplest structures — they are the ones who took an afternoon in 2023 to write down what they actually have.
Key takeaways
- Enhanced trust reporting applies from the 2023 tax year (trust years ending after December 30, 2023), with T3 returns generally due about 90 days after year-end.
- Filing trusts must complete Schedule 15, disclosing detailed beneficial-ownership information for trustees, beneficiaries, settlors, and controlling persons.
- Bare trusts — common, informal, often undocumented "in trust for" arrangements — can be caught, even with no income and no tax.
- The gross-negligence penalty of 5% of the trust's property value (minimum $2,500) means a forgotten arrangement can cost far more than a complied one.
- Build a complete trust inventory now and gather beneficial-ownership data early; the expensive risk is the trust you forgot you had.
In trust planning, the dangerous arrangement is never the one you manage — it is the one you forgot you created.
RN Canada Accounting & Advisory helps BC owners inventory their trust and holding structures, assess bare-trust exposure, and prepare for the new T3 and Schedule 15 regime. If your corporate group includes trusts — or arrangements you are not sure count as trusts — we can map your exposure and put a clean filing plan in place.