Joint Bank Accounts = Bare Trusts ?! | Income tax filing | Discussion forum

My experience is typical bank staff will suggest all sorts of things for convenience and minimization of paperwork without being aware of consequences.

They probably would stare with 'deer in headlight' syndrome if one was to bring up legal vs beneficial ownership issues, especially in the context of non-marital joint ownership situations. The courts gotta love this stuff (roll eyes) when joint ownership of convenience becomes a bun fight in Estate distributions.

Since none of us really knows how this is going to unfold this year and next, what we really need to happen this year, is for the banking industry to make it a whole lot easier to set up formal POA over accounts. This Joint (JTWROS) stuff has been a band-aid approach for far too long. Me thinks that is wishful thinking.

I would not worry at all about joint accounts between spouses. That is normal marital assets. The unknown is parent/child combinations in certain situations, or accounts held in trust.

Spouse and I have none of these Joint issues, nor do we have anything joint with an adult child or third party, nor would we ever do so, so none of this affects us.

As to your question, I doubt I would proactively do anything this year that pertains to financial accounts since it is all terribly murky.

Sadly, that is my situation. I am in joint with my mother, both to help her with her management, as well as expand my CDIC coverage.

Increased CDIC coverage for the beneficial owner makes sense to me, especially if joint owner is intended to inherit the money anyway. Lots of people on this forum deal with Oaken, EQ, etc, and others may just want to sleep better.

I can't for the life of me understand why this new rule was put into effect without timely reliable information. It's ludicrous.
I think most of us would want to comply, but with what??

It doesn't affect me personally at this time.
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The change was introduced years ago in the federal Budget 2018.

There was no intention to collect more taxes. The intention was to collect better beneficial ownership info to determine who really are behind accounts at financial institutions and behind legal entities:

Increased Reporting Requirements for Trusts—Beneficial Ownership

Better information on who owns which legal entities and arrangements in Canada—known as “beneficial ownership information”—will help authorities to effectively counter aggressive tax avoidance, tax evasion, money laundering and other criminal activities perpetrated through the misuse of corporate vehicles.

To improve the availability of beneficial ownership information, the Government proposes to introduce enhanced income tax reporting requirements for certain trusts to provide additional information on an annual basis, applicable for the 2021 and later taxation years.

In December 2017, federal, provincial and territorial Finance Ministers agreed in principle to pursue legislative amendments to their corporate statutes to require corporations to hold accurate and up-to-date information on beneficial owners, and to eliminate the use of bearer shares.
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It is doubtful that joint accounts are really trusts. In addition, there's zero additional beneficial information gathered by requiring T3 filings from people who ordinarily use joint accounts. All the beneficiaries are ordinarily listed as the joint owners!

Government is not interested when Alice and her son Bob have a joint account together so that Bob can pay his mother's bills and expenses whenever she gets sick and is not able to. Alice is a beneficiary and recorded as one of the owners of the account. Not that important that Bob is also shown as an owner and could be mistaken for a beneficiary as well.

The government is interested in gathering more info when Alice and Bob have a joint account and they are actually a front for someone, like the husband/father Carl, who is not shown as one of the joint owners on the account and who has a disreputable past.

I don't see that it's simply an initiative of the current govt (or its 2017 version), as Norman's excerpt says the provinces signed on, and they would not normally all be of the same opinion.

In the end, they all want more money, or will: and it doesn't matter which party is in power. For now, they are just tightening up their records. The main target seems to be corporations, where there is potentially more money to be gotten.
However, they will also be interested in people who have joint accounts largely to reduce the income they declare and put it on the tax return of someone in lower tax bracket - should that info come to their attention.

As far as I know (and someone can show me if I'm wrong), this will not tell them how much money you have. It's only about income and who owns which percentage of the account / income. They don't know if the $1,000 on your T5 represents 1% of $100,000 or 6% of $16,667. So I don't really think it's about the wealth tax per se.

bhuc, I tend to see it like you, mostly.

CRA, albeit in an HST-related document here, has its working definition of a bare trust as:
"means a trust where the trustee has legal ownership of the property but has no other duties, obligations and responsibilities with respect to the property as trustee other than to transfer, under the absolute control and instructions of the beneficiary, the title to the property."

So wouldn't a person whose parent adds them to a joint account to manage parent's funds, i.e. whose only function is to spend the money in it as the parent has set out, i.e. transfer title to the property, be a bare trustee?

And if more duties are included then if not a bare trustee the person might be considered a full trustee.

Either way there's a requirement to file T3 Return now.

On the other hand where someone is added to the account only for CDIC purposes, for example, or to avoid probate taxes or other inheritance purposes, but has zero duties, that suggests it's not a bare trust in CRA eyes.

Again, I think if someone goes to their bank and asks the bank if, for its own internal purposes, it classifies the account as a trust account that might be useful if CRA comes calling, maybe.

When CRA receives a T5 slip they have a pretty good idea of how much money it takes to generate that much interest income, based on general interest rates, though I agree they might be off a bit more in times like this where interest rates are percentage-wise very different than a few years ago. And if you're reporting less income than the T5 slip shows for your SIN they're pretty good at reassessing you and/or finding out under what other SINs the rest of the interest income was reported. In my experience anyway. And with these new trust requirements I'd imagine they're going to be even more focused, if certain joint accounts now are in their sights.