New tax reporting requirements for Bare trusts
As new tax filing standards are in place for bare trust assets, one expert says these requirements will not necessarily offer the Canada Revenue Agency (CRA) the financial transparency they’re hoping for.
Starting this spring, Canadians will need to disclose beneficial ownership information for trusts when filing taxes, including for bare trusts. Ali Spinner, a tax partner at Crowe Soberman LLP, said in an interview with BNN Bloomberg Monday that a bare trust is when one person or one entity owns title to an asset in beneficial ownership for someone else.
“I completely understand that the CRA would like more transparency in finance when they wrote the legislation — they’re looking for more information about who really owns assets. If assets are held by one person, who is really the beneficial owner,” Spinner said.
“Although there will be costs associated with the filing, in many bare trust tax returns, we’ll be telling the government who the trustee is and who the beneficial owner is, but we won’t actually be telling them what the asset is on that trust tax return,” Spinner explained.
Until recently, there was no bare trust filing requirement with the CRA.
Those looking to file for a bare trust will have to do so before the April 2 deadline, Spinner said, noting that this will be the first time the filing requirement has been set in place.
Spinner said these filing requirements are “not easy to file.”
“A layperson, a lay-taxpayer who is wanting to file this for themselves may have difficulty,” she said.
“There will be costs. There will be a lot of time spent by accountants. I’m not sure if the government is going to get all the information they’re looking for from all of these filings.”
Spinner explained that a bare trust relationship could occur if a legal title holder is not the same individual as the beneficial asset owner. An example of this, she said, could be if “somebody holds something in trust and takes care of it for someone else.”
For the rest of Spinner’s interview with BNN Bloomberg, watch the video article above.