The UHT Q&A page mentions an individual being on title, but splitting the rental income with their spouse and states that this does not necessarily constitute a partnership.
My question however is, would this be considered an informal bare trust and still subject the spouse on title to UHT filing? Or do you need to have signed actual legal documents for establishing a trust for the filing requirement to kick in?
If it’s not clearly defined, how are you guys handling these types of situations or how do you advise the client?
Do you mean that, for a couple, let’s call 'em A and B that A is on title only, but is splitting the income with B for tax filing purposes (which is what I’m assuming your question actually is)?
If so, regardless of the other relationship, is A an “affected owner” in his/her own right?
Sorry, I guess I could have worded it better. Yes, A is on title. B is not on title. But they both contribute to covering the expenses and take equal share of the income.
Q: Is A an affected owner and needs to file a UHT return?
Well, we can’t answer that. YOU have to determine, based on the criteria provided, whether A is an affected owner (quite separate from any other considerations). So, eg. if a non-resident of Canada, then, yes…an affected owner. AFTER determining that, you can come to a query about B.
Absent any information about the actual owner on title, all one can say is that…possibly there is a Bare Trust in place, but whether there is a UHT filing required is simply a question that can’t be answered based on the info provided.
Tax is specific and questions NEED to address ALL material aspects of a situation. A general question is simply not effective in this context. Sorry to be the bearer of bad news.
I appreciate you taking the time to reply in detail. I guess I’m confused as to what other aspects of the situation are pertinent. A & B are both citizens and residents of Canada. The only reason I thought A might need to file is because I thought there is an implicit trust relationship and I was wondering if that in itself (absent everything else) makes them an affected owner and triggers a filing requirement as the “trustee of a trust”. Or is that only for formal trusts?
1.13. Paragraph (b) of the definition of excluded owner in section 2 of the UHTA refers to an individual who is a citizen or permanent resident, except to the extent that the individual is an owner of the residential property in their capacity as a trustee of a trust. Does the reference to “trustee of a trust” include a trustee of a bare trust?
Yes. For purposes of paragraph (b) of the definition of excluded owner, the CRA interprets the word trust to include a bare trust and interprets the word trustee to include a trustee of a bare trust.