Here’s a simple way of thinking about it. Suppose 3 friends want to by a condo together and rent it out for the income. Rather than all 3 being registered on title as owners, they incorporate a company to hold title to the property. There are some advantages to doing this. The 3 friends will own the shares of the company, which is often referred to as the nominee or bare trustee given that the 3 friends are the true, or beneficial owners. In the past they would each report a third of the income and expenses of the property on their personal tax returns and the nominee corporation didn’t have to file its own return. Now CRA is requiring that the nominee file a tax return as well to disclose the trust relationship.
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