About to send out the Pre-Season T1 letters but notice the new T3 Trust Reporting requirements are not mentioned, including Bare Trusts, and especially the April 2, 2024 trust filing deadline. The focus seems to be more on UHT reporting.
Are others adding this information to their T1 Post-Season or Pre-Season letters they are sending to their clients?
I’m concerned about Bare Trusts as discussed in an earlier discussion on UHT Returns. The specific scenario I’m thinking about is where the parent’s name is on title because the child’s credit rating wasn’t sufficient to qualify for a mortgage, even though the child makes all the payments and essentially own the home, or where a parent places an Adult child on Title for estate planning purposes. I believe the trustee in these situations are required to file the Schedule 15 for this property where the property value is > $50,000.
I’m guessing most of my clients are unaware of this new requirement, so thinking this T1 Pre-Season letter is one way to make them aware of this new requirement and the April 2, 2024 deadline to file the T3 Trust Return.
Absolutely adding it, as we’ve discovered a bunch of scenarios this will apply across our T1 and T2 clients. We’re shocked so few people are talking about the bare trusts and the crazy implications this all has. We’ve had multiple calls with CRA that make things less clear each time we talk to them and too much is outside of tax definitions and firmly in the legal realm.
We are letting clients know there’s new reporting requirements, what we think they mean, the consequences of not reporting, and to let us know if they think they have any situation that falls under the various criterias and we can dig further.
Basically it will be pointing out the scenarious of:
Personal: On title - bank accounts over 50k, vehicles, properties etc
Corporate: Mismatched titles (vehicles and property in the corps that are in personal names), bank accounts, shareholder loans (if applicable) and anything else that may have been excluded from UHT filings that is now a bare trust
We’re waiting for one more call back from CRA regarding T2 shareholder loans and if they fall under these stupid new rules.
We will let clients know all of the above, and the penalties for not filing, etc and also remind them that UHT is still in play and this is the last chance to have 2022 or 2023 penalties waived so if they missed letting us know about any properties, now’s the time to check in.
All that being said, even with how proactive we are for the 3000 or so clients we service, we’re still getting people who didn’t read the letter or didn’t think it applied to them until they went to sell the property so we’re working on putting more onus on the clients and taking responsibility for reporting things to us in a timely manner.
You can lead a horse to water but you can’t make it a duck
Thanks…would think that there will be a de minimis approach this. Unless significant, or used in a … let’s say “questionable” transaction…I really can’t see the Bare Trust rules playing a part. The fact eg. that a shareholder purchased a printer on a personal VISA and expensed it to a corp for $500…well, if the Feds want to go that route, they will clog the Appeals Branch SO badly and the Courts SO badly that they will eventually issue Administrative Guidelines. Now, a $300K power shovel? Different story.
Not sure what the fuss would be about Shareholder Loans, especially given the recent ruling in Sussex Group - Allan Sutton Realty Corp. v. The King (2024 TCC 1) which, while not directly on point does touch on the “shared usage” issue of an account - in this case not even in the spouse’s name. This would be an area I’d like to know more about though.
I think the basic bare trust cases - perhaps most likely to be for parent/child ones - are likely to also be the most problematic. Documentation as to intent, purpose and non-beneficial (or otherwise!) ownership would, I think, be key.
Finance has really jumped the shark here. The Libs have gone rule-crazy.
Yes I believe this one is more important than UHT. I am adding information on my T1 letter but I am also still unclear how it applies to certain situations such as joint bank accounts. I understand that an account held in trust, say for a minor child, would be a bare trust. But what about a joint investment account with an elderly parent for probate/estate planning? The parent still retains beneficial ownership but an adult child has signing authority just in case needed. Any thoughts?
You can just print it to a Word or pdf document, which will filter out all the code. I did load it with Word, and that is a good idea, as it catches the spelling and typing errors. Thanks!
I believe you simply download the files onto your computer and then place them into your Tax Cycle’s Templates folder.
If you open TaxCycle, you can access the Template Editor in the sidebar on the right side. Once that is open, you should see ‘Templates Folder’ on the top bar.
Clicking it should open up a dialog box listing your templates.
Right under the Close button, you should see the path to your templates folder.
You should be able to click it and it’ll open for you.
Not sure if you will need to restart Tax Cycle for the new template to be available.
Hello everyone! We are looking at adding the following three questions to the pre-season letters for the next release. Would they work for everyone? (I will need to add them by midday tomorrow to get them in the queue for testing, so please let me know what you think.)
Do you have an in-trust bank or investment account with a fair market value greater than $50,000?
Are you on the title of any property for estate planning purposes?
Are you on the title of any property for an individual under the age of 18?
a parent is on title of a child’s home (without the parent having beneficial ownership) to assist the child in obtaining a mortgage;
a parent or grandparent holds an investment or bank account in trust for a child or grandchild;
** one spouse is on title of a house or asset although the other spouse is at least a partial beneficial owner;*
Estate Planning Reasons
a child is on title of a parent’s home (without the child having beneficial ownership) for probate or estate planning purposes only;
a child is on parent’s financial accounts (or other assets) to assist with administration after the parent’s passing;*
Business Administration Reasons
** a corporate bank account is opened by the shareholders with the corporation being the beneficial owner of the funds; · a corporation is on title of an individual’s real estate, vehicle or other asset, and vice-versa;*
** assets registered to one corporation but beneficially owned by a related corporation;*
** assets registered personally but beneficially owned by the company, such as real estate or vehicles*
** use of a nominee corporation for real estate development purposes;*
** a partner of a partnership holding a bank account or asset for the benefit of all the other partners of a partnership;*
Some of these are ‘caught’ by your 3, but the ones proceeded by double asterisk are not (for some reason italics is not working…)
Also, if there is income on the account, is there a reporting requirement even though the capital is less than $50,000?
Another related question… Would it be helpful to have a checkbox on the Info worksheet as well, like we do for UHT? If we add that, we can insert something in the client letter about T3 filing requirements.
