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New Tax Rules regarding Bare Trusts - Joint Property Issues
October 31, 2023
7:51 pm
AltaRed
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A discussion thread at FWF https://www.financialwisdomforum.org/forum/viewtopic.php?p=753480#p753480 is discussion the creation of Bare Trusts for joint property, including bank accounts et al for tax year 2023and beyond. Some background material is here https://www.producer.com/opinion/new-rules-bring-reporting-requirements-for-bare-trusts/ From what I have observed so far, it appears a number of JTWROS arrangements that exceed $50k in value could result in the need for a T3 Trust filing.

November 3, 2023
5:03 pm
Bill
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I found on the Justice Dept website the following description of the new rules you're referring to (I think):

"Part 1 would amend the Income Tax Act and the Income Tax Regulations to require every person in a fiduciary capacity, that is, a person acting on behalf of and in the best interests of another person, or similar role, to provide certain information in relation to express trusts. Generally, an express trust is a trust made in writing, other than a trust created as a result of an individual’s death. The information must include the name, address, date of birth (in the case of an individual), jurisdiction of residence and taxpayer identification number, such as a social insurance number, business number or trust account number, of each trustee, beneficiary, settlor as well as each person who has the ability to exert control over trustees......"

I'm certainly no expert but based on the first two sentences I'm not sure a joint bank account where a parent adds a child solely to help parent with their finances, for example, would be targeted by these rules. And why would they care about joint bank accounts like this, what would be the purpose? There would be a million of these at the banks, I'm pretty sure CRA doesn't want to be inundated with information they have no use for. And even if they do perhaps the banks will issue the information needed to be sent to CRA re. joint bank accounts.

I don't know, just seems odd to me that the hole they're trying to plug is not obvious, not sure what the purpose of this is, so it's hard to know if joint bank accounts would be of interest to them.

November 3, 2023
6:34 pm
AltaRed
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I don't pretend to know where and how far any of this might occur, but it behooves anyone here to be aware that a number of joint arrangements may have 'trust targets' on their backs and to stay on top of developments.

November 3, 2023
9:22 pm
Norman1
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A joint account with an adult child is not a bare trust.

The "beneficiary" remains one of the legal title holders of the joint account. Consequently, the adult child does not hold the legal title to the joint account.

There's no written declaration of trust either. A joint account opening agreement is not a declaration of a trust.

November 4, 2023
7:01 am
Bill
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That's what I was thinking, Norman1, that this does not affect your run-of-the-mill joint bank accounts between parent and child or between spouses.

There are various definitions of "bare trust", one accounting firm's site indicates "For purposes of the new reporting rules, the government defines a bare trust as "an arrangement under which [the trustee] can reasonably be considered to act as agent for all the beneficiaries under the trust with respect to all dealings with all of the trust's property"." Again, this to me looks like these joint bank accounts would not be included, though the legislation does apply to trusts, not just to bare trusts.

And I'd guess if they were included at some point there would be a fair bit of info from the big banks, financial writers, etc for all the uninformed masses who have joint bank accounts with family members.

I did note the legislation has a carve-out of some kind for indigenous folks, doesn't appear to apply to them (in some or all circumstances, I'm not sure).

November 4, 2023
10:18 am
Norman1
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What would be a bare trust would involve no joint account.

Adult child opens a non-joint account. Parents fund the account. Child signs a side agreement with the parents.

Adult child is the trustee that holds the legal title to the individual account. "Beneficiary" parents do not hold legal title. The side agreement establishes the trust.

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