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Voluntary Disclosures
4-05-2017
The Voluntary Disclosure Program {VDP), also known as Canadian tax amnesty, allows taxpayers with unfiled Canadian income tax returns or unreported income to correct incomplete or inaccurate information, or disclose information that has not been reported in previous dealings with the CRA (Canada Revenue Agency). Taxpayers can avoid being prosecuted or penalized by making a valid voluntary disclosure.
CRA Annual Report to Parliament
In January 2016, the CRA released its Annual Report to Parliament 2014-2015. In that report the following comments were made regarding the VDP:
· In 2014-2015, the CRA continued to promote awareness of the Voluntary Disclosures Program through its website, a promotional video, tweets, tax tips and stakeholder messaging.
· Total unreported income from all voluntary disclosures was over $1.3 billion, an increase of 65% over the 2013-2014 fiscal year.
· Total unreported income from offshore disclosures was $780 million, an increase of 157% from 2013-2014. The number of disclosures and the amount of undeclared disclosures, in part due to continued international efforts to share tax data, made up most of the increase.
· There were 19,134 voluntary disclosures received in fiscal year 2014-2015, an increase of 21% over the prior year.
Under the VDP, individuals may correct inaccurate or incomplete information previously provided to the CRA or disclose information they have not previously provided.
Usually, an individual makes a voluntary disclosure as protection against significant penalties — or, in extreme cases, prosecution — that may result if the errors or omissions are detected by the tax authorities first. The VDP allows individuals to disclose prior omissions in a manageable way. Indeed, the VDP is an integral part of any successful self-assessment tax system.
For the disclosure to be valid, it must:
· Be voluntary
· Be substantially complete
· Involve the risk of a penalty
· Include information that is at least one year overdue
To be voluntary, the submission must be initiated by the individual before the tax authorities (including Revenu Québec) have begun any inquiry. If an audit or investigation has already begun, or if the individual is party to a transaction that is under review by the CRA or any other authority or administration, a disclosure is not considered voluntary. With respect to the completeness, it should be noted that documentation may be required in order to verify the information disclosed.
Who can apply?
The program is available to any taxpayer. The term taxpayer includes:
· an individual
· an employer
· a corporation
· a partnership
· a trust
· a goods and services tax/harmonized sales tax (GST/HST) registrant/claimant
· a registered exporter of softwood lumber products
You can also have an authorized representative submit an application on your behalf.
The Voluntary Disclosures Program gives you a second chance to change a tax return you previously filed or to file a return that you should have filed. You can apply to the Canada Revenue Agency (CRA) to ask for relief of prosecution and penalties.
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