2023 Tax Year – Be Sure to Tell Your Accountant if You’re a Co-Signer

New reporting rules for 2023 stipulate that all trusts, even those that aren’t formally drafted by a
lawyer, must file an annual return, barring those that meet specific criteria. Failure to do so
could lead to penalties of up to $2,500!

This ruling specifically includes “Bare Trusts.” A Bare Trust is an arrangement where one
person appears as an owner of property on legal documents, but a separate person is the
ultimate beneficiary of the asset. Most commonly in real estate transactions, this occurs when
one party (such as a parent) co-signs for a mortgage on a property that is
owned/maintained/paid for by another (such as their child). This act of generosity, by mom or
dad, is now considered a reporting requirement by CRA, including filing for a trust number.

If you’ve co-signed for a mortgage, are on title to a property that you don’t personally use, or
have signing authority for a relative’s bank account, you may be in a Bare Trust relationship. To
avoid hefty fines and future complications, be sure to disclose any of these relationships to your
accountant in advance of the April 2nd trust filing deadline.

Thomas Johnson, CFP®, B.Comm.(Hons.)
-Certified Financial Planner with Cascade Financial Group-