What taxes qualify for a Voluntary Disclosure (Canadian Tax Amnesty)?
Any Canadian taxes (personal or corporate) that you evaded qualify under the Voluntary Disclosure program.
- income taxes on undeclared income including income from criminal activities or cash sales
- GST/HST on undeclared income or that was collected but not remitted
- unremitted payroll deductions
- unpaid excise taxes
- unreported offshore income
- unreported online income (including unreported eBay income)
- unreported offshore assets or incorrect T1135 Form
Do I need to report my back taxes through a tax amnesty lawyer?
No you don’t. But acting on your own, or through an accountant, exposes you to the Canada Revenue Agency, who may reject your application and impose penalties or commence prosecution based on the information that has been provided to them. Furthermore an accountant’s files can be seized by CRA in the same way that they can seize your files.
What are the penalties for late tax filing?
Filing your tax return after the due date incurs a late filing penalty of 10% of the unpaid taxes. This penalty amount then incurs interest. For repeat late filers the penalty is increased.
What is the difference between tax evasion, late tax filing, unfiled tax returns and unpaid taxes?
Tax evasion is the deliberate falsification of your tax return, either by not reporting income or falsely claiming expenses. It can lead to prosecution resulting in penalties of between 50% and 200% of the taxes evaded and in a prison sentence.
Late tax filing incurs a late filing penalty of 10% of taxes owing. For repeat late filers the penalty is increased.
Unfiled tax returns will normally lead to late tax filing and therefore penalties, but can also result in prosecution.
Unpaid taxes result in interest charges on the balance owing. There are no further penalties or prosecution.
What happens if I deliberately evaded taxes or didn't file tax returns ?
You are exactly the type of person the Canadian Tax Amnesty program is meant for. Individuals or corporations who have evaded taxes by not reporting taxable income, including undeclared offshore income, undeclared online income (including undeclared eBay or other online income) qualify.
Do non-Canadian residents qualify?
Non-Canadian residents who have a Canadian tax liability because they previously lived in Canada or have Canadian source income qualify for the Canadian Tax Amnesty. Your file will be handled in Ottawa instead of the local taxation office.
What happens if I don't have all of my records?
You will have to determine your income to the best of your abilities but a lack of records will not disqualify you from making a Voluntary Disclosure. We work with you and your accountant to help you recreate the figures and records.
What is the procedure for making a Canadian Voluntary Disclosure?
Formal written retainer to ensure privilege and confidentiality, Voluntary Disclosure application submitted as soon as possible. Under the new rules in effect since 2018 tax returns have to accompany the voluntary disclosure. The new rules also require that taxes owing be paid or payment arrangements acceptable to CRA be entered into. We formally retain an accountant on your behalf to maintain solicitor client privilege.
Should I file my returns before applying for Tax Amnesty Canada?
If you have not filed your returns for several years, do not file them before applying for Tax Amnesty Canada. Once your returns are filed you no longer qualify and will be subject to penalties and full interest.
What are the benefits of a Voluntary Disclosure in Canada?
The benefits of filing a Tax Amnesty Canada application are:
- No prosecution
- No penalties
- Interest reduction
Is my information protected by solicitor-client privilege?
Since we are lawyers, and practice only as lawyers, you are ensured that your file is protected by solicitor client privilege and the Canada Revenue Agency can never obtain any information from us. This privilege is only available to lawyers, and not to accountants unless they are also lawyers. If we retain an accountant on your behalf, any work done by that accountant for us will also be privileged.
What happens if I have unreported offshore assets or income?
CRA is focusing on unreported foreign bank accounts and unreported offshore income. A voluntary disclosure will eliminate any prosecution and penalties.
Can I submit a Voluntary Disclosure through an accountant?
Yes you can, but your information will not be privileged so CRA can seize the accountant's files and use the content against you and have the accountant testify against you. If you have to go to court the accountant cannot represent you and the way in which your file was handled may create problems in court.