Quote:
Originally Posted by Manhattanboy
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.
|
LOL, that's not simple at all. I'm not sure there's a simple way to explain it or think of it. Higher level, it's a lot easier to understand, but lower level, it's hard. Like trying to explain what someone's chess piece does to someone who doesn't understand chess and you do must so without them ever understanding the rules of chess or the chess board where the chess piece goes. Most attempts to make bare trusts easier to understand seem to make it more confusing.
IMO, the definition of a bare trust is an arrangement without a formal trust arrangement AND has a bare trustee.
A bare trustee basically means someone/entity who legally owns an asset on paper, but is not the person/entity who actually has discretion or authority of that asset.
It's a little like the Emperor's new clothes story. The CRA is demanding people who aren't wearing clothes to declare their situation. CRA is taking money from the Emperors wearing no clothes, but are also the swindlers who made the "clothes" in the first place.