The recent last-minute decision by the Canada Revenue Agency (CRA) to retract the reporting requirement for bare trust arrangements has left many Canadians frustrated and out of pocket. Peter Corry from Alberta, who paid $700 for an accountant to file his bare trust tax returns, expressed his disappointment at the sudden rule change. The CRA announced on March 28 that Canadians with bare trust arrangements would not be required to file a T3 tax return and Schedule 15 unless directly requested by the agency. This decision came just days before the deadline to file, causing confusion and financial strain for many taxpayers.
The new reporting requirement for bare trust arrangements was introduced by the CRA this year, catching many Canadians off guard. A bare trust refers to a legal ownership in which the trustee does not have decision-making power over the beneficiary’s assets and acts only on their instructions. Many Canadians made quick arrangements to file their tax returns to avoid penalties, resulting in additional costs for accounting services and tax preparation fees. The CRA’s decision to waive penalties and retract the reporting requirements provided relief to those who had not yet filed, but left accountants in a difficult position.
Brendan McCann, a partner at McCann & Associates LLP, explained that many accountants had spent significant time researching bare trust arrangements, discussing requirements with clients, and preparing to file tax returns before the CRA’s announcement. While clients were billed for filed returns, accountants who had not yet filed would likely not be compensated for their time and effort. McCann emphasized the need for better communication and guidance from the CRA and the Department of Finance to prevent similar issues in the future. He expressed hope that future tax reporting rule changes would provide more notice to taxpayers and accountants.
The consequences of the last-minute rule change have left both Canadian taxpayers and accountants frustrated and disappointed. McCann highlighted the anger felt by many on both sides and called for better preparation and organization from the CRA. John Oakey of Chartered Professional Accountants (CPA) Canada acknowledged the frustration expressed by stakeholders regarding the sudden rule change, but he did not expect any reimbursements to be offered by the CRA. Oakey advised Canadians affected by the change to reach out to their Member of Parliament to express their concerns and frustrations with the system.
Despite the criticisms leveled at the CRA, Oakey stressed that there are multiple parties involved in the decision-making process, and it may not be entirely fair to place all the blame on the agency. He recognized that there may be underlying factors that influenced the late announcement. The CRA reiterated its commitment to providing further guidance on filing requirements and communicating with Canadians as more information becomes available. While stakeholders expressed concerns about the impact of the rule change, there is little expectation of reimbursement from the CRA. Oakey encouraged affected individuals to engage with their representatives to address their frustrations with the system.
