A Conservative MP is asking Canada’s taxpayers’ ombudsperson to investigate the Canada Revenue Agency’s handling of “bare trust” reporting requirements.
New reporting rules implemented this year initially required anyone with a bare trust to file a T3 tax form. But the CRA announced that such trusts would be exempt from the reporting requirements just days before the filing deadline.
“While the CRA’s announcement was welcomed by some, it came only days before the filing deadline, which shows a complete disregard for the concerns and negative impacts felt by taxpayers,” MP Adam Chambers wrote in a letter to Canadian Taxpayers Ombudsperson François Boileau on Monday.
A bare trust relationship is one where a person has legal ownership of a property or asset but doesn’t hold beneficial ownership.
A bare trust can be something as simple as a joint bank account. A bare trust can also occur when a parent cosigns a mortgage for a child and becomes partial owner, or when an aging parent puts their kids down as partial owners of their house in anticipation of an impending death.
Canadians are not taxed on the value of a bare trust, but the government initially introduced the measures to target things such as money laundering, terrorist financing and tax avoidance.
Chambers said the new rules created confusion for Canadians.
“The rules were as confusing as they were when they were initially proposed and professionals had been seeking guidance from the CRA with little substantive response,” he wrote in his letter.
Many Canadians have spent hundreds of dollars in tax preparation fees in order to complete the complex tax forms.
Chambers said the reversal showed a lack of respect for Canadian taxpayers.
“The CRA’s mishandling of the new reporting requirements for bare trust undermines confidence in the tax system, which has already eroded over the last few years,” he wrote.
CBC has asked Boileau’s office for comment on Chambers’ request.
Source Agencies
