Some Canadians are out money after CRA made last-minute change to bare trust rules

Some Canadians are feeling frustrated after having paid hundreds of dollars in tax preparation fees for something the government says it will no longer require this year.

The Canada Revenue Agency (CRA) announced last week that Canadians with «bare trusts» won't be required to file a T3 tax return form under new reporting rules for trusts that took effect this tax season.

Under the new reporting rules, anyone with a bare trust initially was supposed to file a T3 tax return form naming the trustees, beneficiaries and settlors of each trust by April 2.

The reversal of that rule was announced just days before the T3 filing deadline, after many taxpayers already had done their preparation work.

«I think it's a total waste of my time. It's a total waste of my money,» said Patricia Brubaker from Toronto.

Like many others with bare trusts, Brubaker had her accountant file the T3 form on her behalf. She said she hasn't been billed for that work yet but expects it to cost upward of $700.

«I'm going to have to pay for this, whether it had to be filed or not,» she said.

There is no definition of a bare trust in the Income Tax Act. The CRA defines a bare trust as «arrangement under which the trustee can reasonably be considered to act as agent for all the beneficiaries under the trust with respect to all dealings with all of the trust's property.»

John Oakey, a vice president with the Chartered Professional Accountants of Canada, said a bare trust relationship is one where a person has legal ownership of a property or asset but doesn't hold beneficial ownership. While some bare trusts can be rather complex, he said, most are fairly simple.

«These are very informal relationships and nobody thinks twice about them because they're so informal,»