Amidst tax complexities, the Canada Revenue Agency (CRA) has extended relief for farmers in bare trust arrangements by exempting them from filing T3 Income Tax and Information Returns, including Schedule 15, for the 2024 tax year. This acknowledges farmers’ reliance on bare trusts for simplicity and succession planning.

The change reflects CRA’s responsiveness to unintended burdens on Canadians and highlights the need for ongoing awareness of tax regulations. The Ontario Federation of Agriculture (OFA) advocates for permanent relief, supporting members through updates and resources to navigate evolving tax requirements.

Read below for further details:

Relief for Farmers in bare trust arrangements

1. • The Canada Revenue Agency (CRA) has announced an exemption from filing the T3 Income Tax and Information Return, including Schedule 15, for individuals involved in bare trust arrangements for the 2024 tax year.
   • This exemption provides immediate relief to many farmers who often engage in bare trust arrangements for operational simplicity.
   • A bare trust is a legal arrangement where one person (the trustee) holds the title to a property or account but acts solely on the instructions of the beneficial owner.

Reason for the last-minute change 

1. • The CRA acknowledged that the new filing requirements for bare trusts, initially set for this year, inadvertently placed a significant burden on Canadians unaware of the filing obligations and penalties.
   • Farmers, who utilize bare trusts to facilitate land ownership and family succession planning, were among those significantly affected by the reporting requirements.

Exemption for 2024

1. • For the 2024 tax year, bare trusts are exempt from the previously required T3 return unless directly requested by the CRA, averting the risk of severe penalties for late or non-filing.
   • This reprieve is especially crucial for the farming sector, where bare trust arrangements are prevalent for practical and operational reasons.

Important points for members to know about

1. • While the temporary exemption is welcome, we would like for these measures to be made permanent to ensure the stability and ease of farm business operations.
   • OFA emphasizes the essential role of bare trusts in the agricultural industry and the disproportionate effect of such reporting requirements on farmers.
   • These exemptions are for bare trusts only, other types of trusts—particularly those with a formal trust agreement are still required to file a T3, including the expanded information asked on Schedule 15 by April 2^nd to avoid penalties.

What we are doing 

1. • OFA remains committed to supporting our members understand their reporting requirements and will provide updates as new information from the CRA becomes available.
   • We encourage all members who may be involved in a trust arrangement to stay informed and consult with financial advisors to understand the full implications of these changes on their farm businesses.
   • For more information you can watch OFA’s Webinar “Farm Tax Update 2024” with BDO. In this session we covered this topic and other important 2024 tax changes. Click here to watch the recording.