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InsightsWhat Every Family Needs to Know About Joint Accounts, Bare Trusts and the CRA

June 04, 2025 • 4 MIN READ Author Avatar

When it comes to managing family wealth, the way accounts are titled can have significant tax implications. The Canada Revenue Agency (CRA) has increased its scrutiny on joint accounts and bare trust arrangements, and many well-intentioned families may be exposed without knowing it.

The CRA Is Paying Attention

Over the past year, there has been a noticeable rise in CRA enforcement around bare trusts. These are arrangements where one person holds legal title to an asset, such as a joint bank or investment account, on behalf of someone else who is the true beneficial owner.

In 2022, the CRA introduced enhanced reporting rules for trusts, requiring many informal arrangements to file a T3 Trust Return, even if there was no income or capital gains. While enforcement was temporarily paused in 2024, the obligation is now back in focus.

For families using joint ownership to avoid probate, reduce administrative burden, or assist elderly parents, it is essential to understand the current risks.

CRA official FAQ: CRA Bare Trust Rules

What Is a Bare Trust?

A bare trust exists when:

  • One person is added to an account or asset for legal title only
  • The original owner retains full control over the account or asset
  • The joint owner has no beneficial interest until the original owner passes

This is often seen when parents add children to an account for convenience, but legally the CRA may view it differently.

Common Misconceptions

At Verus, we often see families unintentionally setting up structures that create tax and legal exposure. Here are a few common misconceptions:

  1. “If it’s joint, it’s shared.”
    Not necessarily. The CRA assesses beneficial ownership, not just whose names are on the account.
  2. “I have Power of Attorney, so this isn’t a trust.”
    A Power of Attorney gives you authority, but it does not alter ownership. If you hold assets on someone else’s behalf, this may still be considered a bare trust.
  3. “There is no income, so there is nothing to report.”
    Reporting requirements can apply even if there is no income. A T3 return may be required simply because of the account’s structure.

Real-Life Example: Ben and His Mother

Ben was added as a joint owner on his 82-year-old mother’s non-registered investment account to help with her financial affairs. She maintained full control of the account, made all investment decisions, and continued to file taxes on the income. Ben believed this was a routine joint account, but in reality, he held legal title without beneficial interest.

This is a clear example of a bare trust.

Under the CRA’s updated guidance, this arrangement likely meets the criteria for mandatory reporting. If left unreported, penalties can reach $25 per day, up to a maximum of $2,500, even if the account generated no income.

What Families Should Do Now

If you have joint accounts within your household, particularly across generations, we recommend the following steps:

  • Review all joint ownership arrangements with your financial advisor and accountant
  • Clarify your intentions: is this for convenience or estate planning
  • Document who controls and benefits from the account
  • File a T3 Trust Return if required

At Verus, we coordinate closely with your external advisors to ensure all reporting obligations are met while protecting your long-term plans.

Final Thoughts

Joint ownership is often used to simplify wealth transfer and administration, but when misunderstood, it can invite unnecessary scrutiny and penalties. With the CRA now actively enforcing new rules on bare trusts, it is more important than ever to confirm how your accounts are structured and reported.

Verus Financial specializes in helping affluent families navigate these complexities through a holistic wealth planning approach. If you are unsure about your current setup or want a second opinion, we are here to help.

Let’s Talk

If you would like us to review your joint accounts or broader estate planning structure, we invite you to reach out for a confidential conversation.