CANADA Law and Practice Contributed by: Ian M Hull, Suzana Popovic-Montag and Nick Esterbauer, Hull & Hull LLP
10. Fiduciary Regulation, Standards and Taxation 10.1 Corporate and Professional Fiduciaries In Canada, corporate fiduciaries must generally be licensed to serve as trustees. These requirements are province- and territory-specific, as each jurisdiction has its own statutory framework governing the trust relationship. For example, in Ontario, trust companies providing trust services to the public must be reg- istered as per the Loan and Trust Corporations Act, RSO 1990, c L.25. In British Columbia, corporations are prohibited from carrying on trust business unless they are trust companies under the Financial Institu- tions Act, RSBC 1996, c 141. While corporate trustees may also be incorporated federally, trustees involved in succession and estate planning are generally gov- erned by provincial law. Professional trustees are not held to a higher standard of care than non-professional trustees. In Fales v Can- ada Permanent Trust Co , 1976 CanLII 14, the Supreme Court of Canada held that “the standard of care and diligence required of a trustee in administering a trust is that of a man of ordinary prudence in managing his own affairs and traditionally the standard has been applied equally to professional and non-professional trustees”. Although professional trustees may present themselves as possessing greater competence and expertise with trust administration, they remain sub- ject to the same obligation to exercise reasonable skill and care in performing their duties. Several Canadian jurisdictions permit the formation of private trust companies that do not offer services to the public, including New Brunswick, Ontario and British Columbia. This structure may be appealing for succession and estate planning, particularly for trusts containing substantial assets. In such cases, practitioners may establish a private trust company to act as trustee and manage the trust. Private trust companies do not offer services to the public, and instead typically operate for the benefit of specific families or limited groups, and are subject to differ- ent, generally less onerous regulatory requirements, though they must still comply with corporate law and fiduciary obligations.
These estate and wealth planning tools may be used for a variety of reasons, including asset protection, reducing an estate’s tax burden – particularly probate fees or estate administration tax – and preserving pri- vacy. 9.2 Recent Developments Affecting Planning Vehicles Trusts may currently be a less attractive planning vehicle in light of Canada’s enhanced trust-reporting regime, which generally requires trusts to file a T3 return and, where applicable, a Schedule 15 disclos- ing details regarding the beneficial owners of the trust property. However, bare trusts have been exempted from these reporting rules for taxation years ending on or after 31 December 2024, and the 2025 federal budget has pro- posed deferring bare trust reporting so that it would apply only to years ending on or after 31 December 2026. Pending enactment, Bill C-15, tabled in November 2025, also proposes to exempt trusts with less than CAD50,000 in total assets from filing a T3 return. Unlike the previous exemption for such trusts, which only applied to certain types of assets (like cash or government securities), the proposal contains no asset-type restrictions. As a result, many low-value or inactive trusts would not need to file annual returns, starting with the 2025 tax year. Under Bill C-15, trusts would also be exempt from filing and providing detailed Schedule 15 information if the fair market value of their total assets does not exceed CAD250,000 throughout the year, provided that all trustees are individuals and all beneficiaries are individuals related to each trustee. To qualify, the trust may only hold low-risk assets, such as cash, bank-issued GICs, rights to income from those GICs, and specified exempt life insurance policies (valued at their cash-surrender value). This exemption would apply to many common family trusts that hold mod- est investment portfolios or personal-use assets. Pro- posed changes would also expand the definition of “related persons” to include aunts, uncles, nieces and nephews, thereby broadening the scope of permitted beneficiaries under the exemption.
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