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The New Trust Beneficiary Reporting Rules Are Coming…..

The New Trust Beneficiary Reporting Rules Are Coming…..

By:

Posted July 12, 2022

We have known since 2018 that changes were coming to provide transparency regarding beneficial ownership.  Annual reporting is going to be the norm regardless of whether tax is owing.

The legislation is still in draft form but the highlights we are going to need to address, for those trusts required to report, are:

  • Identification details:
    • name,
    • address,
    • date of birth,
    • place of residence,
    • tax identification number (unless privilege is claimed).
  • for each of
    • the settlor,
    • the trustees, (including those who could exert control over Trustees’ decisions regarding disbursements,
    • beneficiaries, including contingent beneficiaries.

Bare Trust

We often use trusts in both our estate planning and real estate practices.  While there are a number of exemptions to the proposed reporting requirements, such as a graduated rate estate, a bare trust is not  exempted from the reporting requirements.  A bare trust is often used simply to hold title to land for a multitude of reasons.  The only requirement of the Trustee is to convey legal title to the beneficiary on demand.  The bare trustee has no independent power, discretion or responsibility relating to the trust property and acts only on direction of the Trustee.

In today’s escalating housing market it is not uncommon to see parents agree to be added to the deed and mortgage for their adult child’s home in order for the adult child to qualify for the mortgage.  This arrangement can be a bare trust provided the parents have not contributed to the purchase and will have no active duties to perform regarding the property.  A bare trust agreement should be prepared at the time of purchase.  At a later date, when the adult child qualifies for a mortgage without the strength of the parent’s covenant title may be transferred from the parents, as trustees  to the adult child, as beneficial owner.  The Trust agreement, if prepared,  and affidavits from both adult child and parents are required to be remitted to the Minister of Finance to support the exemption from land transfer tax.

As it appears that these bare trusts will be caught under the draft legislation clients should consider whether a transfer can be done before the legislation is enacted or obtain the necessary information and be prepared to report to avoid the penalties associated with failure to comply.

This blog post was written by Heather Austin-Skaret, a Partner in the Wills and Estates, Estate Litigation and Real Estate teams.  She can be reached at 613-369-0356 or at Heather.Austin-Skaret@mannlawyers.com.

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Heather Austin-Skaret

Heather Austin-Skaret

My practice includes estate planning and administration as well as commercial and residential real estate work. I value my long standing relationships with some of Ottawa’s leading real estate agents and mortgage brokers. I enjoy sharing my knowledge and experience with others and enjoy giving presentations and seminars. Over the years, I have developed extensive experience in the area of estate planning and administration, which allows me to assist clients at some of their most difficult times.  I am constantly updating my knowledge as a member of S.T.E.P. and the Ottawa Estate Planning Council. As a true Maritimer, born in Springhill, Nova Scotia, I, of course, headed west. I started my university career at the University of Saskatchewan and then started inching my way back east, stopping to attend and complete my undergraduate at the University of Manitoba in 1990 with a Bachelor of Arts (Honours). I then moved to... Read More

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