New tax-filing obligations around trusts and real estate investments are forcing many Canadians to spend hundreds – if not thousands – of dollars in accounting and legal fees to disclose to the government informal family financial arrangements, according to a recent Globe and Mail survey.
A March online survey conducted by The Globe and Mail through the Carrick on Money newsletter shows those costs are often steep. Of more than 400 respondents who said they were affected by the new tax rules, more than two-thirds reported spending or being quoted over $500 in accounting and legal fees.
That’s because his father added Mr. Smith’s name and that of his two siblings onto the land title of his Saskatchewan farm, a common arrangement that can simplify the eventual property transfer. But Mr. Smith said he confirmed with his tax accountant that this setup constitutes what is known as a bare trust, in which he and his siblings hold the land as trustees and are now subject to new tax-reporting rules.
Many Canadians who had their names added to the title of a family member’s home, land or financial account may be considered to be part of a bare trust, even if they never formally or intentionally created such a legal structure. Starting with the 2023 tax year, trustees of a bare trust, with few exceptions, are required to file an annual trust return.
Those fees aren’t unusually large. In Vancouver, Jeffrey Foreman, principal at D&H Group LLP, said his firm charges around $750 for a simple T3 return. More complicated files that require research to collect the information necessary to complete the paperwork can cost as much as $2,000 to $3,000, he said.
A UHT return can cost as little as $500 or as much as upward of $2,500, depending on complexity of the file, Mr. Foreman said.
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