One Comment About Taxation – Canada’s Trust Reporting System is Too Complex and Unnecessary

As a tax practitioner, I’m used to complexity. I deal with it daily. Artificial intelligence has become a genuinely useful tool for navigating some of that complexity, and combined with a few decades of experience, it makes tax a bit easier to navigate.

 

What AI can’t do is cure my furniture building aversion – or anything requiring assembly. Ask me to put together a piece of flat-pack furniture, and I freeze. I have to leave the room when a family member takes one on. The instructions are vague, a piece or two always seems to go missing, and when it’s finally standing there, I’m never quite sure it’s actually put together right.

 

That describes Canada’s revived trust reporting rules that impact thousands of Canadians and their advisors. The instructions – determining whether an arrangement is a “trust” at all, whether it’s a “bare trust,” whether one of the many carve-outs applies – remain vague, built on undefined terms and facts that are often genuinely unknowable at the time you need them.

 

The pieces are frequently missing: nobody drafted or kept a trust deed or thought of themselves as a trustee. And the people doing the assembling are mostly accountants, not lawyers – asked to make what is, at its core, a legal characterization call, on facts a client may not even think to mention because nothing about the arrangement feels remarkable to them. Once the advisor has made their best call, there’s no confirmation they got it right – just years of quiet exposure until, maybe, an audit tells them otherwise – with significant penalties attached.

 

The revised rules are still a very expansive fishing net. A surprising number of ordinary arrangements must first be examined to determine whether a trust exists, whether it is a reportable bare trust and, only then, whether one of the statutory exclusions applies. The net is broader than most people realize, and the holes are narrower than they look, because the hard work is often determining whether you are even near one.

 

Cutting more holes doesn’t shrink the net, either – it just means more fish have to swim close enough to one to find out whether they fit through. Consider an elderly parent who adds an adult child to a bank account simply so bills can get paid. The new $250,000 family exception may relieve the filing, but someone still has to determine whether a trust exists and whether every condition for the exception is satisfied throughout the year. Fewer filings at the end doesn’t mean less work along the way.

 

Good luck trying to navigate this unless you have significant experience.

 

Adam Smith set out four tests for a good tax system in his 1776 treatise The Wealth of Nations: fairness, certainty, convenience, and efficiency. The second and third ones – that a tax should be certain and levied in the manner most convenient for the person paying it – are where this regime fails outright. There is nothing certain or convenient about asking ordinary Canadian families holding assets for one another to comply with a complex reporting regime.

 

Once the net is cast and the trustees, beneficiaries and settlors are dutifully reported – names, birthdates, SINs – what does the Canada Revenue Agency (“CRA”) do with that information? Something useful? We’ve been here before. Foreign reporting forms like the T1135 and T1134 have carried substantial penalties for decades, even though the reporting obligation itself often produces no additional tax owing – yet the CRA has never clearly shown what that mountain of reporting has actually yielded compared with its compliance cost. The vast majority of people filling out these forms have nothing to hide. They’re not the target. They’re the bycatch.

 

Contrast that black hole with how precisely the CRA quantifies everything else it cares about. Its own 2026–27 Departmental Plan sets a $20-billion compliance revenue target and tracks tax debt and collection results in detail. But ask what beneficial-ownership trust or foreign reporting data has bought Canadians in improved compliance, and there’s no comparable public scorecard. If a reporting regime can’t show its work, why does it get to keep imposing itself on people who were never the problem?

 

It’s also worth noting the CRA isn’t short on modern tools to find the fish worth catching without dragging the net through everyone’s living room. The CRA runs more than 200 AI projects, uses machine learning for real-time risk assessment, and says its long-term goal is a system that makes compliance “effortless” by minimizing the need for taxpayer interaction. That’s a good goal, but it’s hard to square with expanding a manual, legally ambiguous reporting regime onto ordinary families in the same year it’s boasting about how much friction AI is removing everywhere else.

 

Advisors, meanwhile, have had to build their own workarounds. My co-owned education venture, Canadian Tax Matters, launched a Trust Reporting Navigator this week to walk practitioners through whether an arrangement is even a trust, whether an exemption applies, and how to document the position. It does not, of course, replace wisdom and judgment but needing a purpose-built tool just to answer a threshold question is itself the indictment.

 

Any serious tax reform conversation needs to include a hard look at reporting regimes generally – not just this one. The evidence for third-party information reporting can be powerful: some studies tie automatic financial-account exchange between governments to measurable compliance gains. But that is materially different from forcing ordinary taxpayers to identify legally ambiguous relationships and report them themselves. From where I sit, expansive self-reported regimes add complexity and cost to a system already at its breaking point unless government can show, with real evidence, that the benefits exceed the burden.

 

Smith gave us the test 250 years ago. It’s long past time we applied it, so Canadians can stop wondering if they assembled their filing correctly – without the CRA handing them an Allen key too.

 

One Comment About Leadership – Don’t Be a “Ride The Brake” Leader

 

Have you ever driven behind someone who rides their brake? Not stopping, not committing to a speed – just a constant, low-grade drag on the pedal that keeps their brake lights flickering the whole way down the road. It’s hard on their car: ride the brake long enough and you’ll burn through a set of pads well before their time. And it’s hard on everyone behind them too, because a brake light is supposed to mean something. When it’s on all the time, no one behind you knows whether to slow down, hold steady, or that you’re about to actually stop. So, they brake too, just in case. Everyone behind you ends up driving worse than they should have to, for no reason at all.

 

Leadership has the same failure mode. A leader who never fully commits to a decision – and never fully kills it either – is riding the brake. They’ll greenlight a project, then quietly starve it of the attention or resources it needs to actually move. They’ll tell the organization they’re behind a direction, then hedge every time it costs them something. Nothing ever comes to a clean stop, and nothing ever gets properly up to speed either.

 

The cost isn’t just confusion, though that’s bad enough. It’s wear. A team working for a brake-riding leader is burning energy the whole time trying to read signals that were never meant to be read that closely, second-guessing decisions that were never actually made. That’s wear on people the same way it’s wear on brake pads – and it happens quietly enough that you don’t notice until something’s worn through.

 

Good leadership doesn’t mean never slowing down. It means when you commit to a speed, you commit to it – and when you need to stop, you stop, decisively, and tell people why.

 

Don’t ride the brake. Pick a speed or pull over.

 

One Comment About Economics / Politics  – The PBO’s Report Card on Budget 2025’s $41 Billion “Investments”

 

The Standing Senate Committee on National Finance asked the Parliamentary Budget Officer a direct question: of the $41.3 billion in new Budget 2025 measures across infrastructure, private R&D, housing, industrial development, and tax incentives, what economic rate of return is Canada actually getting, by category, under different scenarios. Parliament wanted a scorecard on whether the government’s investment bet was paying off. What it got back was a note that spends four pages hedging before it gets to the one table that actually answers the question – PBO’s Investment Multipliers (September 10, 2026).

 

That table shows PBO’s estimated GDP return per dollar invested, over five years, with and without a Bank of Canada response:

 

● Infrastructure: climbs from 80 cents to $1.10–$1.20 by year five – the only category that ever clears a dollar-for-dollar return.

● Private R&D: similar path, topping out around 90 cents to $1.10.

● Housing: starts strongest (90 cents) but declines to 60 cents by year five – pulling activity forward, not compounding it.

● Industrial development programs: 10 to 20 cents. Most of the dollar leaks out on imported machinery and equipment.

● Tax measures (accelerated depreciation, immediate expensing): starts at 20 cents, grinds up to 70 cents by year five.

 

Do the math the PBO wouldn’t: on their own model, the majority of this $41.3 billion doesn’t generate a dollar of GDP for every dollar spent within five years – and that’s before the deadweight cost of taxation and debt servicing, both of which PBO explicitly excludes and both of which would push the real number lower.

 

This is a familiar pattern, and worth naming as one. Every few months, another government program gets studied, and the studies keep landing in the same place: Ottawa picks a sector, writes a cheque, and the return is mediocre at best and, in the case of “industrial development” – a euphemism for subsidizing specific companies’ equipment purchases – a genuine misallocation of capital at 10 to 20 cents on the dollar. Infrastructure works reasonably well because it’s close to a public good; everything that starts to look like industrial policy – picking winners, subsidizing inputs — performs worse.

 

The lesson isn’t “spend differently.” It’s the one the federal government keeps refusing to learn: the government is a poor allocator of capital compared to the people who’d otherwise be deploying it, and every one of these reports is another data point for getting out of the way and letting capital find its own return.

 

Bonus Comment – From Jim Collins –  American Author and Speaker – About Being Consistent

 

“The signature of mediocrity is chronic inconstancy. The signature of greatness is a disciplined and consistent focus on the right things.”

 

Exactly. Consistency compounds. So does indecision.

 

I hope today’s newsletter has been thought-provoking for you.

 

As many of you know, I’m passionate about helping people make better decisions – whether in tax, leadership, or business. If you’d like to go deeper on those topics, my recently released book, Making Life Less Taxing Version Two is now available and expands on many of the practical ideas I’ve written about over the years.

 

I’m also putting the finishing touches on my next book, Leadership Compounds: How Small Decisions Build Culture, Credibility, and Legacy. It explores a simple but powerful idea: leadership isn’t about grand gestures – it’s about the small, consistent decisions that compound over time.

 

For those interested in a more hands-on approach, I’ll soon be announcing a bespoke consulting initiative – The Acorn Growth Program – designed to help leaders and organizations grow intentionally, one small (but important) decision at a time. Feel free to reach out to me directly for more information.

 

And if you’re not already on my mailing list, feel free to sign up for my In the Mood Network newsletters to receive more content. No fluff – just practical insights on tax, leadership, and economic policy.

 

Thanks for reading. As always, I welcome your thoughts and feedback.

 

Amazon Books

Apple Books