GST/HST Technical Information Bulletin B-068 "Bare Trusts" Amended 10 January 2005

[A] bare trust is not engaged in commercial activities and is not entitled to claim ITCs. Instead, the beneficial owners are entitled to claim ITCs for the GST on expenses relating to their commercial activities. These expenses may be incurred by the bare trust acting as their agent.

The determination that a trust is a bare trust generally will result in a conclusion that only the beneficial owner should register and that the trustee should not register. However, the earning by a bare trustee of fees for its services would require the trustee to register unless one of the exemptions in s. 240(1) was available.

....if a trustee performs functions in addition to holding bare legal title, but does so strictly on the instructions of the beneficial owners without any discretionary powers and is acting as an agent, the trust may still be a bare trust. For example, the bare trustee may perform property management functions such as leasing commercial property to tenants specified by and for the account of the beneficial owner.

On the other hand, where a person acts under a duty to manage and/or dispose of the trust property, and the person has independent or discretionary power or responsibility to do so, the Department considers this person to be acting as a trustee of the trust and not as an agent of the beneficial owner.

...[I]t is necessary to examine the nature of the duties contemplated by the trust to determine whether the principles of agency rather than the principles of trust apply....Where no [trust] documents exist, but property is nevertheless held in trust, the Department will generally take the view that the principles of trust rather than agency apply. However, it will consider surrounding circumstances....

[T]he Department considers that a trust and agency relationship may co-exist in certain situations. Consequently, some duties of the trustee may be performed as trustee, others as agent.

After discussing whether there is a bare trust, CRA stated:

[S]ections 268 and 269 of the Act provide that, for GST purposes, there will be a supply when any property, including the legal estate, is settled with a trustee or distributed to the beneficial owners, even if this is not a disposition for income tax purposes. Nevertheless, legal title without the equitable interest would normally have little or no monetary value. The settling of the legal title in a bare trust and the transfer of the title to the beneficial owner would normally have no GST implications.