Conservative MP asks CRA watchdog to look into 'bare trust' reporting reversal
A Conservative MP is ask‐ ing Canada's taxpayers' ombudsperson to investi‐ gate the Canada Revenue Agency's handling of "bare trust" reporting require‐ ments.
New reporting rules im‐ plemented this year initially required anyone with a bare trust to file a T3 tax form. But the CRA announced that such trusts would be exempt from the reporting require‐ ments just days before the filing deadline.
"While the CRA's an‐ nouncement was welcomed by some, it came only days before the filing deadline, which shows a complete dis‐ regard for the concerns and negative impacts felt by tax‐ payers," MP Adam Chambers wrote in a letter to Canadian Taxpayers Ombudsperson François Boileau on Monday.
A bare trust relationship is one where a person has legal ownership of a property or asset but doesn't hold bene‐ ficial ownership.
A bare trust can be some‐ thing as simple as a joint bank account. A bare trust can also occur when a parent cosigns a mortgage for a child and becomes partial owner, or when an aging parent puts their kids down as partial owners of their house in anticipation of an impending death.
Canadians are not taxed on the value of a bare trust, but the government initially introduced the measures to target things such as money laundering, terrorist financ‐ ing and tax avoidance.
Chambers said the new rules created confusion for Canadians.
"The rules were as confus‐ ing as they were when they were initially proposed and professionals had been seek‐ ing guidance from the CRA with little substantive re‐ sponse," he wrote in his let‐ ter.
Many Canadians have spent hundreds of dollars in tax preparation fees in order to complete the complex tax forms.
Chambers said the rever‐ sal showed a lack of respect for Canadian taxpayers.
"The CRA's mishandling of the new reporting require‐ ments for bare trust under‐ mines confidence in the tax system, which has already eroded over the last few years," he wrote.
Boileau's office said it's heard from several Canadi‐ ans with complaints about bare trust reporting and has been monitoring the issue.
"We will continue to gath‐ er more detailed information from the CRA. As per our nor‐ mal procedure, we will be in a better position to deter‐ mine the best course of ac‐ tion once we have all the fac‐ ts," a statement from Boileau's office said.