What you need to know about the new trust reporting rules

financialpost.com:

You can be forgiven if you missed the latest development in the ongoing saga of the new trust reporting rules, especially If you’ve been away over the summer.

Fortunately, the news is good since it seems to provide permanent relief for many Canadians who may have otherwise been required to file a T3 trustincome tax and information returns for what are commonly referred to as “bare trust” arrangements.

A bare trust exists when a trustee’s only role is to follow the instructions of the beneficiary. Bare trusts can potentially be used for nefarious tax purposes, but they’re most often used for real estate ownership, to protect confidentiality and for probate planning.

Various arrangements, such as when a child is added to a parent’s joint bank or investment account “for estate planning purposes only,” or a parent goes on the title of residential real estate so their child can qualify for a mortgage, could potentially be considered a bare trust arrangement and be caught by the new reporting rules.

Before delving into the new relief measures announced in the draft legislation released in August, let’s review the history of the new reporting rules, which can be traced back to 2018.

Before these new changes, a trust was only required to file a T3 return if income tax was payable by the trust for the year, or if the trust had either a capital gain or disposed of capital property in the year. But expanded trust reporting rules originally proposed in the 2018 federal budget were supposed to change that as of the 2021 tax year.

The goal of the new reporting, according to the Canada Revenue Agency, was “to improve the collection of beneficial ownership information with respect to trusts and to help the … CRA assess the tax liability