Canadian Tax Amnesty - Voluntary Disclosure Canada

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Canadian Tax Amnesty - Voluntary Disclosure Canada Program (VDP):

This site provides general information about the tax amnesty program in Canada (the voluntary disclosure programme). For specific answers about your situation contact us without obligation on a privileged and confidential basis at 1-877-283-8290 or by e-mail at david@taxpage.com or click here for a contact form.

If you are losing sleep because of unreported income, including unreported online income, unreported Ebay income or unreported offshore income, tax evasion or unfiled tax returns, your situation is probably not as bad as you fear.

The Canadian income taxation system is based on self-assessment. Taxpayers sometimes fail to report all income that they should, either through inadvertence or due to the extreme complexities of the Canadian tax system, or due to wilfull tax evasion.

Taxpayers may sometimes neglect to file tax returns at all. They neglect to file one year, then they are afraid to file the next year's tax return because of the old unfiled return. A series of unfiled returns then builds up.

Canada Revenue Agency's (CRA) voluntary disclosure programme (VDP) policy is to promote voluntary compliance with the tax laws, through a program sometimes called tax amnesty Canada or tax pardon. It has a policy to encourage taxpayers, both individuals and corporations, to come forward to report any previously unreported income or GST or customs duties or to file tax returns that were not previously filed.

To encourage this voluntary compliance, CRA has a program, called Voluntary Disclosure, sometimes referred to as Tax Amnesty Canada, of not undertaking criminal prosecutions or even applying civil penalties, including late filing penalties, on any voluntary disclosures.

Furthermore, the identity of anyone making a voluntary disclosure will be held in confidence. This is a marked contrast to Revenue Canada's position with tax prosecutions where they seek the maximum publicity possible.

This Canadian Voluntary Disclosure program applies even to a taxpayer who has committed deliberate tax evasion, including failure to report income, whether earned in Canada or offshore or through criminal activity. Unreported online income or unreported eBay income is also covered. It also applies to someone who has wilfully failed to file tax returns, no matter how many years have not been filed.

Procedures

Formal written retainer to ensure privilege and confidentiality
Voluntary Disclosure application submitted with basic information as soon as possible
We formally retain accountant on your behalf to maintain privilege
90 days to submit detailed information; apply for time extension if needed

Conditions to be met for Canadian Voluntary Disclosure or Canadian Tax Amnesty

To qualify under the program, you must initiate the voluntary disclosure or Canada tax amnesty application. If CRA has begun audit or enforcement action, or has demanded that returns be filed, the disclosure is not considered to be voluntary and full penalties will be applied. A computer generated request for a return may not always disqualify you from benefiting from the program.

The disclosure must include enough details to allow all of the facts to be verified.

The taxpayer must pay the total amount of any taxes and interest owing at the time of disclosure, or make acceptable payment arrangements.

Incomplete income tax Voluntary Disclosure

If the disclosure is incomplete, the disclosed information will be considered to be voluntary. However, the taxpayer will be subject to civil penalties or prosecution relating to any substantial undisclosed amounts. You are only required to make your reasonable best efforts to supply all necessary information.

Conditions for a valid income tax Voluntary Disclosure

CRA determines that the disclosure is voluntary;
CRA determines that the disclosure is complete;
The disclosure involves a penalty; and
The disclosure must include information that is:

(i) at least one year past due, or

(ii) if less than one year past due, not initiated simply to avoid the late filing or instalment penalties.

Timing of Tax Voluntary Disclosure

A voluntary disclosure (tax amnesty application) is effective from the time the we contact CRA on your behalf, even if detailed submissions are not made at that time. Therefore, for example, a taxpayer who has not filed tax returns for several years need not have them ready when first contacting CRA. Normally 90 days are provided to submit all necessary information. Extensions of time are usually granted for valid reasons such as difficulty in compiling the necessary information. The initial contact will be considered to be the date of the voluntary disclosure. The rules for a no-names disclosure are slightly different.

Unfiled Tax Returns

A taxpayer who makes a voluntary disclosure or tax amnesty Canada application and voluntarily files unfiled returns will only be required to pay the tax owing on the reported income with interest. No late filing penalty will be charged.

Unreported Income

Where a taxpayer has failed to report income, including a failure to report foreign income, or unreported offshore income, or unreported online income (including unreported ebay income) and voluntarily reports it, only the tax owing on the unreported income plus interest on it will be charged. The same is true where improper expenses have been claimed.

No-Names Disclosure

CRA allows us to approach them on your behalf without revealing your name to negotiate the terms of your voluntary disclosure. We have 60 days from the time we make the no-names disclosure to reveal your name. Once your identification is provided to them they will review their files to see if you qualify for the program. The no-names disclosure is sometimes helpful, and we use it in appropriate circumstances.

Our Experience

David J. Rotfleisch, C.A., LL.B. practices strictly as a tax lawyer, which guarantees solicitor-client privilege and absolute confidentiality, but also has his chartered accountant designation. He has 30 years of professional experience and deals with voluntary disclosures on a daily basis. He deals with each file and personally reviews all tax returns before submitting them to CRA. For specific answers about your situation contact him without obligation on a privileged and confidential basis at 1-87-SAVE-TAX-0 or (1-877-283-8290) or by e-mail at david@taxpage.com or click here for a contact form.

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