All About Estates

Beneficial ownership reporting for trusts – the uncertainty is almost here!

The beneficial ownership reporting for trusts (BORT) rules, originally announced in the 2018 Federal Budget on February 27, 2018, has made its way into the House of Commons. The original draft legislation released by Department of Finance on July 27, 2018 was updated on February 4th and on August 9th of 2022. This final update of the BORT draft legislation is now included in the 172 pages of Bill C-32[1] introduced in the House of Commons on November 4th, 2022.

New effective date

The draft BORT legislation contained in Bill C-32 has a new effective date applying to taxation years of trusts that end after December 30, 2023[2]. With the change in the effective date, trusts now have until December 31, 2022 to make changes to the trust or wind it up entirely in order to modify or avoid reporting beneficial ownership information [3].

Uncertainty in draft legislation

In the 5 years since BORT was announced, it would appear that the legislation will now pass thru the House of Commons – on its way to the “royal assent” finish line.  Sadly though, the Department of Finance has neglected to provide clarity with the following two provisions that were added in the February 4th, 2022 update to the original draft legislation:

  • Subsection 150(1.3) Bare trusts and arrangements – For the purposes of this section, a trust includes an arrangement under which the trust can reasonably be considered to act as agent for all the beneficiaries under the trust with respect to all dealings with all of the trust’s property
  • Subsection 150(1.4) Solicitor-client privilege – For greater certainty, subsections (1.1) to (1.3) do not require the disclosure of information that is subject to solicitor-client privilege.

The unfettered inclusion of bare trusts or arrangements to the BORT rules has significantly expanded its reach to such an extent that the reporting regime may result in copious amounts of information that could unintentionally diminish the overall objective of the rules. Accountants, lawyers and other professionals can provide a very long list of transactions or situations that could give rise to a bare trust or arrangement – that could result in a reporting requirement.

Privileged information

At least lawyers could relieve themselves of the disclosure requirements if the information related to the trust is subject to solicitor-client privilege. Based on the draft legislation contained in the bill, this relieving provision only alleviates the requirement to disclose privileged information – not the filing requirement itself.  Lawyers will be cracking open their law school text books to regurgitate the legal principles of privilege. The Supreme Court decisions in Chambre des notaries du Quebec [4] and Thompson [5] my actually provide lawyers with an additional level of anonymity for their clients when it comes to providing legal services. Both cases ruled that subsection 231.2(1)[6] and 231.7[7] of the Income Tax Act (ITA) infringes on the right to be free from unreasonable search and seizure enshrined in Section 8 of the Charter of Rights and Freedoms, declaring these provisions unconstitutional and inapplicable to lawyers and notaries [8].

No guidance from Finance

The Department of Finance neglected to provide any legislative guidance or explanatory notes regarding either of the above-mentioned draft provisions. Therefore, accountants, lawyers and other professionals are currently left to their own devices to decipher this legislative uncertainty. It is unlikely that our Members of Parliament or Senators will address these issues when debating Bill C-32 given the numerous legislative proposals contained in its 172 pages.  The best-case scenario is for the CRA and the Department of Finance to meet behind closed doors and have a brain-storming session with the goal of providing professionals with some much-needed clarity.



[1] Bill C-32 An Act to implement certain provisions of the fall economic statement tabled in Parliament on November 3, 2022 and certain provisions of the budget tabled in Parliament on April 7, 2022.

[2] The August 9, 2022 draft

[3] For a better understanding of how the effective date applies to trusts, see my previous blog on December 14, 2021 – “Beneficial ownership reporting – don’t rush to wind-up the trust”.  This blog was written at the time the draft legislation was effective for taxation years ending after December 30th, 2021.  When reading the December 14th, 2021 blog, replace the previously effective date with the current effective date (December 30, 2023) contained in Bill C-32.

[4] Canada (Attorney General) v. Chambre des notaries du Quebec, 2016 SCC 20

[5] Canada (National Revenue) v Thompson, 2016 SCC 21

[6] Subsection 231.2(1) Requirement to provide documents or information – This provision allows the CRA to demand information for purposes of administering the ITA

[7] Subsection 231.7(1) Compliance order – This provision allows the CRA to bring an application to a judge to receive a compliance order to demand information for the purposes of administering the ITA.

[8] See AD-21-05 for further information regarding CRA’s response to the two Supreme Court decisions

About John Oakey
National Tax Director for Baker Tilly Canada. John has extensive experience with Canadian corporate and personal income taxes with specialization in the areas of corporate reorganizations, estate planning, succession planning and tax compliance. He also has significant experience dealing with GST/HST issues and U.S. citizen cross-border tax reporting issues.


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