Foresters Financial’s Geoffrey Jones tells WP what tax filers need to correct for next year
We’re almost two months past the April 30 tax filing deadline and it’s advisors across Canada that are cleaning up common mistakes, many of them on returns that look perfectly fine on the surface.
Geoffrey Jones, Director of Tax and Estate at Foresters Financial, has identified five recurring patterns this season, and he’s told WP that most of them carry even greater stakes as the year progresses.
"Many families unknowingly risk severe tax penalties by using common, well-intentioned strategies like adding adult children to joint titles or setting up informal in-trust-for bank accounts without proper legal documentation of their intentions," Jones said.
Foresters Financial has worked with Canadian families across generations for over 150 years, and Jones says the patterns emerging this spring are ones the fraternal benefit society has seen before, just with sharper regulatory edges.
Bare trusts hiding in ordinary accounts
For Jones, the single biggest exposure for ordinary Canadian families in 2026 involves arrangements that barely register as complex. Joint accounts held with aging parents and informal in-trust-for accounts set up for grandchildren are now caught in a significant regulatory shift.
"While these arrangements are often created purely as a matter of convenience or to minimize probate fees, recent legislative updates may currently classify them as bare trusts," he said. "After granting temporary annual extensions in previous years, the Canada Revenue Agency is rolling out mandatory T3 Trust Returns and Schedule 15 beneficial ownership disclosure requirements starting with the 2026 tax year."
The December 31, 2026, deadline is now the central pressure point.
"The critical problem is that the mere existence of these arrangements triggers a complex filing obligation, regardless of whether the account generates active income," Jones said. "Families who are left unaware of this regulatory shift face monumental logistics in tracking down historical data, steep accounting fees, and harsh non-compliance penalties that can reach upwards of 5% of the highest fair market value of the trust assets."
He is direct about what advisors need to do right now. "Advisors must act immediately by conducting comprehensive portfolio audits to shield multi-generational families from these upcoming regulatory changes," Jones said. "I strongly encourage advisors to initiate a formal financial check-up this year to take inventory of asset ownership structures, clarify family intentions, and explicitly map out potential bare trust exposures before the 2026 tax deadlines arrive."
The AMT surprise catching high-income filers off guard
Jones's second concern centres on changes to the Alternative Minimum Tax and the reduced deductibility of investment counsel fees, which are catching higher-income clients off guard this season.
"Under these new rules, which are fully in effect for the 2026 tax year, investors can now only deduct 50% of their investment management fees when calculating AMT, down from the historical 100% deduction," he said. "While individual taxpayers earning under the $181,440 basic exemption are generally shielded, high earners who regularly claim large paragraph 20(1)(bb) deductions against their non-registered portfolios are at a heightened risk of triggering an accidental tax hit."
Family trusts face a specific additional vulnerability. "Family trusts do not qualify for this basic exemption, meaning trusts that invest in managed funds can face immediate AMT liability when distributing net income to beneficiaries," Jones said. "To avoid these costly tax traps, clients must work closely with their advisors and accountants now to review portfolio turnover, harvest available investment losses, and strategically spread out capital gains."
Capital gains confusion that will not go away
The proposed 2024 capital gains inclusion rate increase had a turbulent journey, and Jones says the fallout is still showing up in filings this season.
Initially set to take effect on June 25, 2024, the measure was deferred, then formally cancelled by the incoming Carney government in March 2025, but not before creating significant disruption for advisors and their clients.
"Many investors are currently dealing with the complex aftermath of Canada's abandoned capital gains inclusion rate increase, which has left a trail of miscalculated filings and unoptimized tax losses," Jones said. "While the proposed inclusion rate hike never received royal assent and was ultimately dropped, the Lifetime Capital Gains Exemption was still split into two distinct periods for the 2024 transition year, capping at $1,016,836 before June 25, 2024, and rising to $1,250,000 afterward."
That structural split, Jones says, created downstream problems across the industry.
"This forced fund providers and brokerages to scramble to track and report gains across dual periods on T3 and T5 slips, leading to widespread reporting errors, premature asset liquidations, and improperly applied loss carryforwards," he said.
The awareness gap may be the most pressing issue.
"Some clients and advisors remain completely unaware that the inclusion rate hike failed to become law, meaning they are still operating under obsolete assumptions," he said. "Advisors must retroactively review their clients' 2024 and 2025 filings to fix these hidden errors, re-optimize misapplied losses that slipped through the cracks, and formally educate clients so they can pivot back to a normalized, long-term wealth strategy."
RESP pitfalls for grandparent-funded plans
Jones singles out grandparent-funded Registered Education Savings Plans as another area generating repeated errors, particularly around attribution rules and grant eligibility.
"If a child chooses to skip post-secondary education, the subscriber must repay all government grants and faces a punishing 20% Accumulated Income Payment penalty tax on the investment growth," he said. "While parents can mitigate this by rolling up to $50,000 of the growth into their RRSP, grandparents are often entirely locked out of this strategy if they have already converted their RRSPs into RRIFs."
Coordination failures are also generating expensive penalties. "Because financial institutions do not coordinate with one another, uncoordinated contributions from multiple family members frequently trigger an expensive 1% per month over-contribution penalty against the lifetime $50,000 beneficiary limit," Jones said.
Estate planning gaps compound the problem. "A critical estate flaw occurs when subscribers fail to name a successor subscriber in the contract or their will," he said. "If they pass away, the RESP collapses into their estate, subjecting educational savings to immediate provincial probate fees and potential creditor claims."
Joint accounts and beneficiary errors that surface at filing time
The fifth pattern Jones identifies is among the most common estate planning errors in Canada, and one that often only becomes visible when returns are filed.
"Many families mistakenly assume that adding an adult child to a joint title is a seamless way to avoid probate," he said. "In reality, it can trigger an immediate, irreversible deemed disposition tax liability or inadvertently trap the family in complex 2026 bare trust reporting regulations. Without explicit documentation of intent, these setups regularly spark bitter courtroom battles over whether the asset was a gift or part of a resulting trust."
Beneficiary designations on registered plans present an equally serious risk. "Naming one child as a RRIF beneficiary while leaving the estate residue to another can cause the estate to be drained by the RRIF's terminal tax bill, leaving one sibling with a massive payout and the other with nothing," Jones said. "Similarly, blended families often see their inheritance wishes legally derailed because financial institutions must pay out RRSPs or TFSAs based on contract designations rather than a newer will."
His advice to advisors is unambiguous. "Advisors must treat ownership and beneficiary structures as living documents, prioritizing superior mechanisms like successor holder designations for spouses, to shield clients from accidental tax traps and estate litigation," Jones said.
Looking ahead
Jones frames the underlying problem as a mindset issue as much as a technical one. "The single largest planning error families make is treating tax compliance as a historical filing exercise rather than an active, forward-looking strategy," he said. "Failing to report income from missing slips or lack of reporting on major life events, such as selling assets, commuting a pension, changing residency, or altering property titles, routinely triggers catastrophic, retroactive tax bills."
"True wealth preservation requires sophisticated, multi-year engineering across a client's entire financial footprint," Jones added. "By carefully smoothing out investment liquidations, optimizing pension income splitting, and precisely timing the commencement of CPP and OAS, advisors can systematically insulate their clients from bracket creep and unnecessary wealth erosion."
