A Bare Trust can also be known as a 'simple Trust'. It is one in which each beneficiary has an immediate and absolute right to both capital and income. The beneficiaries of a Bare Trust have the right to take actual possession of Trust property.
The property is held in the name of a trustee, but that trustee has no discretion over what income to pay the beneficiary. In effect, the trustee is a nominee in whose name the property is held and has no active duties to perform.
Bare Trusts are treated for tax purposes as if the beneficiary holds the Trust property in his or her own name. Income tax and capital gains tax are charged on the beneficiary, as if the Trust did not exist.
The beneficiary must declare any income and capital gains on his or her Personal Tax Return. Although trustees can pay income tax on behalf of a beneficiary, it is the beneficiary who is chargeable to tax.