The purpose of the Canada Revenue Agency's (CRA) Voluntary Disclosures Program (VDP) is to promote voluntary compliance with the accounting for, and payment of duty and taxes provisions under the Customs Act, Customs Tariff, Income Tax Act, and Excise Tax Act (GST/HST). The VDP encourages clients to come forward and correct deficiencies to comply with their legal obligations. It is a fairness program that is aimed at providing taxpayers with an opportunity to correct past omissions, thus rendering themselves compliant.
Taxpayers can make disclosures to correct inaccurate or incomplete information, or to disclose information not previously reported. For example, clients may not have met their tax obligations if they claimed ineligible expenses, failed to remit source deductions or GST/HST, or did not file the correct accounting information.
Two other frequent problem areas for taxpayers are offshore funds and failing to file information returns. We often encounter clients who have offshore investments that have not been reported for Canadian tax purposes. Sometimes these accounts have been inherited and the previous holder did not report the income to the CRA. We can assist you in making the necessary disclosures and, often, limit the number of years for which taxes will have to be paid. Once this process is completed, the funds can be brought into Canada with impunity.
Although an individual taxpayer, as opposed to a corporation, has no obligation to file a tax return if there is no tax owing, unless specifically requested to file by the CRA, there are a number of information returns that must be filed regardless of taxes owing. The most common are information returns regarding foreign assets. Although there is no tax component to this filing, there is a penalty of $2,500 per year for non-filing.
Taxpayers who make a valid voluntary disclosure will have to pay the taxes and duties owing, plus interest. In this situation, the CRA can provide relief from penalties and prosecution that would otherwise be imposed under the acts listed above.
We have decades of experience in assisting clients to make a valid voluntary disclosure in order to avoid penalties and prosecution and to allow clients to sleep at night without worrying about the tax department. AND, we can start the process with a no-names disclosure which allows the process to proceed without, initially, disclosing your identity to the CRA.