Canada Revenue Agency (CRA) Exempts Bare Trusts from T3 Reporting Requirements for 2023 Tax Year

In a significant development, the Canada Revenue Agency (CRA) has announced that bare trusts will not be required to file a T3 Income Tax and Information Return (T3 return), including Schedule 15 (Beneficial Ownership Information of a Trust), for the 2023 tax year. This exemption applies unless the CRA specifically requests these filings.

Background and Context

The new reporting requirements for trusts were introduced as part of Canada’s commitment to transparency regarding beneficial ownership information and to strengthen the integrity of the Canadian tax system. However, the impact on Canadians was unintended. Many property managers found themselves grappling with the volume of T3 returns they needed to file

Relief for Property Managers

The CRA’s decision to exempt bare trusts from T3 reporting requirements comes as a great relief to property managers across Canada. As highlighted in our press release, the complexity lies not in the T3 returns themselves but in the sheer number of returns property managers are obligated to submit.

Timing and Implications

Interestingly, the CRA’s exemption announcement coincided with the filing deadline of April 1, providing a timely respite for property management firms. 

It is not lost on us at Aargh Software that the Canadian government exempted bare trust T3 returns just 5 days before the filing deadline of April 1 — and 9 days after we announced our new service “Trust2File” to help Canadian Property Management firms with the volume of their trust filings.

Download Press Release for Trust2File automated T3 filing for Bare Trusts for Property Managers in Canada
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The Bigger Picture

While this pause allows the CRA to refine and clarify filing rules, it’s essential to understand the context. The original requirement aimed to curb tax avoidance, particularly by corporations and wealthy individuals who use bare trusts to circumvent property transfer taxes. Additionally, it serves as a measure to combat potential money laundering.

Property managers, who often create trusts as part of their contractual obligations, can breathe a little easier until the end of this year. The exemption provides a temporary reprieve while the CRA continues its efforts to strike the right balance between compliance and practicality.

The Evolving Landscape

As we reflect on the filing requirements from the past year, it’s clear that the landscape is shifting. The Canada Revenue Agency (CRA) has signaled its intent to refine and clarify the rules surrounding T3 returns. While the exemption for the 2023 tax year provides temporary relief, property managers must remain vigilant. We anticipate that the CRA may seek additional information on T3 forms, potentially including financial reporting. We will see over the coming months as we monitor the filing requirements.

Strategic Recommendations

So, what steps can property managers take to ensure a smooth filing process? Here are our recommendations:

  1. Proactive Trust Account Creation: The cornerstone of efficient trust filings lies in the timely creation of trust accounts. Property managers should initiate this process well in advance—ideally during the fall or early winter. Educate your strata and condo clients about the importance of trust accounts and the upcoming changes. By doing so, you’ll lay the groundwork for seamless compliance.
  2. Trust Filing Numbers: Obtain trust filing numbers by the end of the year. These identifiers are essential for accurate reporting. With the right systems in place, exporting data to our CSV template will be a breeze when December 31, 2024, approaches. Remember, the filing deadline is 90 days after the end of the year, so early preparation pays off.

While the pause in T3 requirements grants us breathing room, staying informed is essential. As property managers, you’re the guardians of trust compliance. By proactively addressing trust account creation and securing filing numbers, you’ll be well-prepared for the next phase. Let’s navigate this evolving landscape together, ensuring smooth sailing for all stakeholders.

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About Aargh Software: Aargh Software specializes in automation solutions for property managers. Our software utilities enhance efficiency in handling high-volume tasks. Email2CRM and Notify!!! seamlessly integrate with the Rent Manager platform, empowering property managers to automate email workflows and boost productivity. Aargh servers have processed over 250,000 emails saving over 7000 hours and 1000 days of admin time for their clients across North America.

Aargh Software Trust2File bare trust T3 filing in Canada for property managers

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