Bare Trust (Nominee Corporation)

Every trust splits ownership in two. Legal ownership is the name on the title or the share register. Beneficial ownership is the right to the property's value, income and use. In an ordinary trust, the trustee holds legal title and also has real powers and duties: investing, deciding distributions and exercising discretion under a trust deed.

In a bare trust, the trustee has none of those. The CRA describes the trustee of a bare trust as essentially an agent of the beneficial owner. The hallmarks are:

• The trustee holds legal title and nothing more.
• The trustee has no discretion and no independent duties of management.
• The beneficial owner can direct every dealing with the property and can call for title at any time.
• Income, expenses and risk belong to the beneficial owner.

For income tax, the arrangement is looked through. Subsection 104(1) of the Income Tax Act provides that, for most purposes, a trust does not include an arrangement under which the trust can reasonably be considered to act as agent for all its beneficiaries with respect to all dealings with all of its property. The beneficial owner reports the rental income, dividends and gains as if they held the property directly.

A nominee corporation is a company, often a numbered Ontario corporation, that holds legal title for someone else as bare trustee. The relationship is usually recorded in a nominee agreement or declaration of trust. Common Ontario examples:

• Real estate. A nominee company is registered on title to a commercial property or development land, while the investors who own it beneficially stay off the register. A title search shows only the nominee; the beneficial owners appear in the private agreement.
• Shares. A person or company holds shares in its own name for the real owner. Corporate law still looks through: under the Business Corporations Act (Ontario), an individual who beneficially owns shares carrying 25% or more of the votes or value is an individual with significant control and must appear in the corporation's register, as our guide to the ISC register and beneficial ownership rules explains.
• Family arrangements. A parent goes on title to an adult child's home to help with a mortgage, or an adult child is added to a parent's bank account for convenience, without either intending to give away a beneficial interest.
• Professional accounts. A lawyer holds client money in trust.

The nominee documents belong in the nominee company's corporate minute book, alongside the directors' resolution authorizing it to act as nominee.

Labels do not decide the question; the facts do. A document called a bare trust agreement that gives the trustee real discretion creates an ordinary trust. An undocumented arrangement can be a bare trust if the title holder simply follows the owner's instructions. A nominee company that starts managing the property on its own judgment, or holds other assets, can drift out of bare trust status, with different tax consequences.

Status as of October 2026. Bare trusts were first brought into T3 reporting for 2023, but the CRA waived filing for that year, and Bill C-15, the Budget 2025 Implementation Act, No. 1 (Royal Assent March 26, 2026), removed the requirement for 2024 and 2025. The same Act adds new subsections 150(1.3) to (1.32) to the Income Tax Act for taxation years ending on or after December 31, 2026: an express trust under which a legal owner can reasonably be considered to act as agent for the persons who have the use or benefit of property is treated as a trust for reporting, with the legal owner as trustee. Unless an exception applies, the arrangement must file a T3 return with Schedule 15, which identifies its trustees, settlors, beneficiaries and controlling persons. Exceptions include arrangements where the legal owners and the beneficiaries are the same people, related individuals on title to a home that is the principal residence of one of them, such as a parent added to help a child qualify for a mortgage, property held solely for a partnership by its partners where the partnership files an information return, and trusts whose assets are worth no more than $50,000 throughout the year. For a calendar-year arrangement, the first return is due 90 days after December 31, 2026, that is, by March 31, 2027. The CRA's trust reporting FAQ works through examples, and our corporate compliance checklist covers the other annual filings a nominee company carries.

• Document it at the start. Sign the nominee agreement or declaration of trust when title is taken. It is the best evidence of who owns what if a co-owner, lender, the CRA or a court asks later.
• Report consistently. The beneficial owners, not the nominee, report the income and claim the expenses. A nominee that reports the property as its own contradicts its own documents.
• Keep the nominee bare. Give it no discretion and no other assets or business, and do not also use it as an operating or holding company.
• Record changes in beneficial ownership. A sale of a beneficial interest is a disposition for tax purposes even when the name on title does not change.
• Maintain the company. A nominee corporation still files its own T2 return and Ontario annual return, keeps its minute book and ISC register current, and from 2026 tracks its T3 obligations as trustee.

Setting up and documenting nominee and holding structures is part of Lamba Law's incorporations and business structuring work.

Arjun Mehta and Sofia Romano buy a $1,600,000 industrial condominium unit in Mississauga in 2024 as 50/50 co-investors. To keep their names off title and simplify a future sale, they incorporate a numbered Ontario company, which they own equally, and register title in its name. A nominee agreement signed on closing states that the company holds the unit as bare trustee, acts only on their joint instructions, and holds no other assets.

Each year Arjun and Sofia each report half of the rental income and expenses on their own returns; the company reports none of it. No bare trust return was required for 2024 or 2025. For the year ending December 31, 2026, the arrangement is caught by the new rules: the unit is worth far more than $50,000, the company is a legal owner that is not a beneficiary, and no other exception fits. The company, as trustee, files a T3 return with Schedule 15 naming Arjun and Sofia by March 31, 2027, and their accountant diarizes the filing every year after. The company's ISC register lists both of them, since each owns 50% of its shares. When the company sells the unit on their instructions in 2029, Arjun and Sofia each report half of the gain on their own returns, as if they had sold the unit directly.