September 2024

We hope you’ve had a wonderful summer! As the colder months approach, we're gearing up for our fall review season. We are excited to connect with many of you in the coming months, whether in person or virtually. Unless you were contacted for an annual review in the spring time, we will be reaching out soon to schedule your review meeting. If you anticipate being away this fall, please let us know so we can adjust our plans accordingly.

TRUST REPORTING UPDATE

Update on Trust Reporting Rules for 2025: Key Changes to Bare Trust Filing Obligations

We previously informed our clients in late 2022 about the expanded trust reporting rules for bare trusts. On August 12, 2024, the Department of Finance released draft legislation introducing deemed trusts, replacing the earlier requirements for bare trusts. These new provisions will take effect for tax years ending on or after December 31, 2025, and no filings are required for 2024.

What’s a Deemed Trust?

A deemed trust applies when a legal owner holds property on behalf of others or a partnership, acting as an agent. Under the new rules, the legal owner is considered the trustee, while those benefiting from the property are the beneficiaries.

Exemptions from Filing

Several common arrangements are excluded from filing requirements:

• Joint Ownership by Beneficiaries: Joint accounts where all legal owners are also beneficiaries.
• Principal Residences: Parents on the title of a child’s home for financing, or one spouse holding legal title to the family home.
• Partnerships: Property held by partners in a partnership that files a T5013 return.
• Court-Ordered Holdings: Property held under a court order.

Expanded Thresholds for Exemptions

The draft rules have expanded exemptions for smaller holdings:

• The $50,000 threshold, which used to apply only to cash accounts, now includes any assets with a fair market value of less than $50,000—meaning some vehicles may now be excluded.
• The cash account threshold has been increased to $250,000, making many more accounts exempt.

Examples Requiring Filing

Certain situations will still require filing, including:

• Corporate Vehicle Held by an Individual: If a vehicle is legally in an individual's name but used as a corporate asset, it would require filing.
• Real Property Held by a Controlling Shareholder: When a shareholder holds real property for corporate use, this will also require filing.

Conclusion

These changes simplify the rules for smaller trusts and exclude many common personal arrangements from filing. If you need clarification or guidance on how these changes might affect you, please don’t hesitate to call our office or send us an email as we would be happy to answer any questions or concerns you may have.

Sincerely,

The Ivory Team

Disclaimer



We have included in this company update general information and commentary on financial planning, accounting, tax and wealth management topics that we think may be of interest to you. Although we do our best to provide accurate information, we cannot guarantee that what you read will be applicable to your personal situation. This update is NOT to be considered or used as financial advice, and any implementation of investment, accounting, or financial planning strategies should be discussed with your advisory team first.   

Please feel free to unsubscribe at any time by clicking 'unsubscribe' at the bottom of the screen.