CRA and Bare Trust Reporting / Trust Return Requirements for 2023 | GTAMotorcycle.com

CRA and Bare Trust Reporting / Trust Return Requirements for 2023

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ReSTored

Well-known member
Spouse has joint bank accounts with her elderly mom and her aunt. The definition of a Bare Trust includes joint bank accounts between non spouses, meaning that she is required to file two separate Trust returns for 2023. Value of these two joint accounts varies over the year, but exceeded $50k on occasion as the accounts are used to hold matured GIC's before being reinvested. It is likely that this requirement will continue indefinitely based on what I've read.

There have been a few articles in the paper about new tax filing requirements for Trusts.

New trust reporting requirements for T3 returns filed for tax years ending after December 30, 2023 - Canada.ca

Your Estate Planning May Be Creating Unintended Tax Reporting Obligations - Pallett Valo Lawyers

A tax accountant I know confirmed the need to file a Trust return and the fee for this would be approximately $300 including HST. The penalty for failing to file a return is $2,500 each and 5% of the highest amount at any time in the year of the fair market value of all the property held by the trust. Return is due April 2, 2024 for 2023 and enforcement will be geared to education this year, financial penalties will kick in next year if the 2024 return is not submitted properly.

I'm going to look at options here. I might have the accountant prepare one return and then use that as a template for the second one that I would do myself this year and I'd do both returns in future years. Huge, useless hassle IMO.

Curious............ What are people planning to do to manage this for 2023 and then ongoing?
 
Well that is interesting and annoying. Thankfully, I am not currently listed on anyones accounts. It would be nice if you only had to officially report if you benefited from a transaction during the year. It sounds like you have access to help your family members but that is for convenience and you do not benefit front the contents in any way right now but will incur expenses.
 
GreyGhost said:
It sounds like you have access to help your family members but that is for convenience and you do not benefit front the contents in any way right now but will incur expenses.
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We have access to pays bills, CRA installments etc.............. No funds flow to us at all. Both ladies are 95+ years old and live independently in a retirement home. Should they need immediate additional care funds from these accounts would be used until POA provisions kick in. Spouse is their POA as well.
 
So stupid. I would imaging that there is a large amount of people that are on their parents accounts just for emergency situations and do not interact with the accounts at all.
I am one of these.

So now I have to figure out how to fill this crap out.


LOL.... you have to apply for a 'Trust Account Number' before you can file.
 
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Thanks for the heads up. I let my neighbour know. She is listed on her mom's accounts but uses them like you do. She wouldn't have bothered mentioning to her accountant as the access in no way affects her life. Now she will bring it up to accountant and let them deal with it.
 
My CA has provided this one pager [if it is of interest to you, please download and read the attachment] on this new Trust reporting requirement.
The notions are open to interpretation - CRA's that is, let's see how this first year works out.
 

Attachments

  • Expanded Trust Reporting.pdf
    1.2 MB · Views: 9
Why have it a joint account? I have access to my parents accounts online and have paid bills and such on their behalf. I have been out of pocket on occasion and have transferred money to my own account from theirs. I see no need to actually have those accounts joint.
 
ReSTored said:
Spouse has joint bank accounts with her elderly mom and her aunt. The definition of a Bare Trust includes joint bank accounts between non spouses, meaning that she is required to file two separate Trust returns for 2023. Value of these two joint accounts varies over the year, but exceeded $50k on occasion as the accounts are used to hold matured GIC's before being reinvested. It is likely that this requirement will continue indefinitely based on what I've read.

There have been a few articles in the paper about new tax filing requirements for Trusts.

New trust reporting requirements for T3 returns filed for tax years ending after December 30, 2023 - Canada.ca

Your Estate Planning May Be Creating Unintended Tax Reporting Obligations - Pallett Valo Lawyers

A tax accountant I know confirmed the need to file a Trust return and the fee for this would be approximately $300 including HST. The penalty for failing to file a return is $2,500 each and 5% of the highest amount at any time in the year of the fair market value of all the property held by the trust. Return is due April 2, 2024 for 2023 and enforcement will be geared to education this year, financial penalties will kick in next year if the 2024 return is not submitted properly.

I'm going to look at options here. I might have the accountant prepare one return and then use that as a template for the second one that I would do myself this year and I'd do both returns in future years. Huge, useless hassle IMO.

Curious............ What are people planning to do to manage this for 2023 and then ongoing?
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Is this requirement for tax year 2003 or after 2003?
 
AllistonGT said:
Why have it a joint account? I have access to my parents accounts online and have paid bills and such on their behalf. I have been out of pocket on occasion and have transferred money to my own account from theirs. I see no need to actually have those accounts joint.
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Ouch. That is offside with banking covenants your parents have with the bank. The term inside a bank for using another’s bank account is impersonation - it’s illegal whether you have permission or not.

Banks monitor this more than you may know, if they suspect someone other than the account holder is doing banking on behalf of the account holders, they may restrict access to telephone and online banking.

The likelihood of getting caught is low. There are still risks to parents if they are victims of fraud — banks are not all that friendly when an account holder facilitates impersonation.

I dealt with this all the time as a banker, while you might be 100% sincere in your efforts, it’s still against the rules and I can guarantee if your parents accounts are frauded, you will be swimming upstream when trying to sort the problem.

If they catch you, one warning. If they catch you again you are branded a fraudster. Say goodbye to your personal Interact privileges, maybe your online banking.

The simple solution is to get joined on the account. You can do it over the phone with most banks.
 
Mad Mike said:
Ouch. That is offside with banking covenants your parents have with the bank. The term inside a bank for using another’s bank account is impersonation - it’s illegal whether you have permission or not.

Banks monitor this more than you may know, if they suspect someone other than the account holder is doing banking on behalf of the account holders, they may restrict access to telephone and online banking.

The likelihood of getting caught is low. There are still risks to parents if they are victims of fraud — banks are not all that friendly when an account holder facilitates impersonation.

I dealt with this all the time as a banker, while you might be 100% sincere in your efforts, it’s still against the rules and I can guarantee if your parents accounts are frauded, you will be swimming upstream when trying to sort the problem.

The simple solution is to get joined on the account. You can do it over the phone with most banks.
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Interesting. We had no idea.
 
Mad Mike said:
Is this requirement for tax year 2003 or after 2003?
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Typo I assume when you write 2003.

This is a requirement for the 2023 taxation year and the return must be filed by April 2, 2024. Many people just finding out about this have little lead time, although CRA says enforcement will be lenient this year.

Right now we have to file two T3 Trust returns for 2023 and, if nothing changes, two T3 returns for 2024 by March 31, 2025 as accounts for both elder relatives have > $50,000 in them this month. I assume I'll probable be able to do the 2024 returns myself using the 2023 as a template + I will have the new trust account number.

If filing these returns is a PITA in the future I suppose we can work to ensure account balances never exceed $50k over the course of the year. Or, as above, we split off from the account on paper (i.e. not a joint account anymore) but manage it informally through sharing of access numbers and passwords. Risks of this, as above, noted.

I think CRA screwed up big time on the joint account threshold of $50,000. Is their presumption that most people would never hit this number and not have to file? Those who do are the 1% so tough luck, we can afford to pay the fees? I think they going to find that hundreds of thousands of people are forced to file as a result of this clueless change.
 
ReSTored said:
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I think CRA screwed up big time on the joint account threshold of $50,000. Is their presumption that most people would never hit this number and not have to file? Those who do are the 1% so tough luck, we can afford to pay the fees? I think they going to find that hundreds of thousands of people are forced to file as a result of this clueless change.
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As for the threshold, I know of more than a few people with elderly parents who sold their residence to move into longterm care. They all have way more than 50k. Most aren't bothering to invest (I think thats a mistake but it's not my money) so it sits in a joint bank account.
 
GreyGhost said:
As for the threshold, I know of more than a few people with elderly parents who sold their residence to move into longterm care. They all have way more than 50k. Most aren't bothering to invest (I think thats a mistake but it's not my money) so it sits in a joint bank account.
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Agree! Very common. Banks encourage it as well to make the accounts joint with the POA to manage incidental expenses.
 
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