Show Transcript
The Taxpayers’ Ombudsperson has launched an investigation into how the Canada Revenue Agency handled new reporting rules involving bare trusts. Nicole Ewing, Director, Tax and Estate Planning at TD Wealth, speaks with MoneyTalk’s Greg Bonnell about the review and the implications for taxpayers.
Print Transcript
You may recall the confusion this spring around the new reporting requirements for bare trusts. Well, this week, a review of those bare trust rules was launched to examine whether taxpayer rights were respected. Joining us now with more is Nicole Ewing, Director of Tax and Estate Planning at TD Wealth. Nicole, always great to see you. With this review underway, refresh our memories of the bare trust saga from the spring.
Well, there was new trust filing rules that were issued that required new trusts, new types of trusts, to file T3's and schedule 15's. And one of those was a bare trust. But there was a whole bunch of confusion about what exactly a bare trust was, whether joint accounts with spouses, or children, or others was included, if you added somebody to your house, whether that was a bare trust.
So lots of confusion as to what that actually meant-- people really worked hard to understand it. People put a lot of time, and effort, and money into understanding it. And then the very last business day before the filing was due, CRA announced that it was going to waive the requirement for 2023 to actually file these returns.
So that's only for 2023. We still have the requirement upcoming for 2024. But there was a lot of confusion. And, frankly, that confusion remains.
All right. So now, we have this review, as I understand, by the taxpayers ombudsperson. What does this actually mean for Canadians?
Well, frankly, it's good news. We're having an examination as to whether or not the CRA respected taxpayers' rights. And there is a bill of rights for taxpayers-- things like you have the right to clear, accurate, timely information. You have the right to have compliance costs calculated into the administration of these sorts of things, and so whether or not CRA administered these rules in a way that respected taxpayers' rights.
But I would caution and say that this wasn't just a CRA initiative, right? This was legislation that was drafted by the ministry, that was passed by parliament. And so this was law. And CRA was tasked with the job of administering it. And it found that it was not in a position to be able to do that, and so said, we're going to waive the requirement for this year.
All right. So, obviously, we'll be watching this review carefully, see what comes of it. What should Canadians take away from all this? There was a lot of drama through the spring before, you said, that last sort of second change of direction?
The takeaway-- that this is always a question of whether or not some of that DIY planning that people do by adding someone to a joint account or adding someone to title on their home may have financial and legal repercussions beyond what you understand. And so working with professionals, working with your investment advisors, your financial planners, your accountants and lawyers to really understand the implications of these situations.
And then, be mindful that this is an examination that could impact your filing requirements for 2024. So we're going to stay on top of that and report back what we hear. But this is an ongoing issue.
Nicole, it's always great to get your insights. Thanks so much for joining us.
My pleasure.
Nicole Ewing, Director of Tax and Estate Planning at TD Wealth.
[MUSIC PLAYING]
You may recall the confusion this spring around the new reporting requirements for bare trusts. Well, this week, a review of those bare trust rules was launched to examine whether taxpayer rights were respected. Joining us now with more is Nicole Ewing, Director of Tax and Estate Planning at TD Wealth. Nicole, always great to see you. With this review underway, refresh our memories of the bare trust saga from the spring.
Well, there was new trust filing rules that were issued that required new trusts, new types of trusts, to file T3's and schedule 15's. And one of those was a bare trust. But there was a whole bunch of confusion about what exactly a bare trust was, whether joint accounts with spouses, or children, or others was included, if you added somebody to your house, whether that was a bare trust.
So lots of confusion as to what that actually meant-- people really worked hard to understand it. People put a lot of time, and effort, and money into understanding it. And then the very last business day before the filing was due, CRA announced that it was going to waive the requirement for 2023 to actually file these returns.
So that's only for 2023. We still have the requirement upcoming for 2024. But there was a lot of confusion. And, frankly, that confusion remains.
All right. So now, we have this review, as I understand, by the taxpayers ombudsperson. What does this actually mean for Canadians?
Well, frankly, it's good news. We're having an examination as to whether or not the CRA respected taxpayers' rights. And there is a bill of rights for taxpayers-- things like you have the right to clear, accurate, timely information. You have the right to have compliance costs calculated into the administration of these sorts of things, and so whether or not CRA administered these rules in a way that respected taxpayers' rights.
But I would caution and say that this wasn't just a CRA initiative, right? This was legislation that was drafted by the ministry, that was passed by parliament. And so this was law. And CRA was tasked with the job of administering it. And it found that it was not in a position to be able to do that, and so said, we're going to waive the requirement for this year.
All right. So, obviously, we'll be watching this review carefully, see what comes of it. What should Canadians take away from all this? There was a lot of drama through the spring before, you said, that last sort of second change of direction?
The takeaway-- that this is always a question of whether or not some of that DIY planning that people do by adding someone to a joint account or adding someone to title on their home may have financial and legal repercussions beyond what you understand. And so working with professionals, working with your investment advisors, your financial planners, your accountants and lawyers to really understand the implications of these situations.
And then, be mindful that this is an examination that could impact your filing requirements for 2024. So we're going to stay on top of that and report back what we hear. But this is an ongoing issue.
Nicole, it's always great to get your insights. Thanks so much for joining us.
My pleasure.
Nicole Ewing, Director of Tax and Estate Planning at TD Wealth.
[MUSIC PLAYING]
