What is VDP or the Voluntary Disclosure Program?
VDP or Voluntary Disclosure Program is a plan of the CRA or the Canada Revenue Agency. In this program, taxpayers in Canada can correct or make changes to the tax they have already filed. They can also reveal information that has not been provided to the CRA before while they were filing their tax return. It’s like giving taxpayers a second chance of coming forward on their own and amending the return filed because there would be no penalty on the taxes owed or criminal prosecution. But please note that in some instances, additional penalty can still be charged, even after the VDP application is considered valid by the Canada Revenue Agency.
The information published by the CRA is often contradictory about the penalty relief. This often confuses taxpayers who are thinking of opting for the Voluntary Disclosure Program.
This is what the CRA states…
"If the CRA accepts a disclosure as having met the conditions set out in this policy, it will be considered a valid disclosure and the taxpayer will not be charged penalties or prosecuted with respect to disclosure. And on the other hand, it states in the same publication that .the Minister does not have to grant relief under the VDP provisions. Each request will be reviewed and decided on its own merit. If relief is denied or partly granted, the CRA will provide the taxpayer with an explanation of the reasons and factors for the decision."
It’s essential to get consult a professional tax lawyer. Of course, you’ll not want to be accepted into the Voluntary Disclosure Program and later told by the CRA that the penalty charges would be waived off just partially. And there are instances where the penalty is not waived at all too.
Rotfeisch & Samulovitch can tell you what you can expect from your dealings with the CRA. A professional tax lawyer at our firm can tell you whether it is good for you to be a part of the Voluntary Disclosure Program at all. And of course, we are going to defend your rights while we are representing you in all dealings with the CRA.
Rotfeisch & Samulovitch serves both self-employed individuals and businesses. Initial e-mail or phone response is free. So here’s your opportunity to get all your questions and concerns answered. All consultations are completely confidential whether you finally choose us or not.
Voluntary Disclosure Program Disclosures
According to the Voluntary Disclosure Program, disclosures can be made for excise taxes, income tax filings, source deductions, excise duties under the EA 2001, ATSCA and SLPECA charges, and GST/HST filings. Canadian taxpayers will have to still make all necessary payments, and interest charged to the CRA. But there will be no criminal prosecution. You might also not have to pay any penalty, often if you are professionally represented. In some instances, the CRA might allow partial relief on the interest charges.
Does The CRA Accept All Voluntary Disclosure Program Applications?
No. CRA does not accept all VDP applications. You’ll have to meet some requirements for the CRA to accept the disclosure you are making, and for you to benefit from the no criminal charges or penalties clause. However, this depends on the specific authorized VDP agent. In other words, that person is going to decide whether you have met all the requirements and whether your application is going to be accepted or not.
Is There Any Time-Limit for Providing Information and Documentation for the Disclosure, So That the Application Is Not Rejected?
You'll have a 90-day time limit. It begins with the EDD or the Effective Date of Disclosure. This is the day when the CRA has received the completed and signed Form RC199, the VDP Agreement, or the date on which you had sent the information in Form RC199 as a letter to the CRA, duly signed by you or your authorized representative.
You may ask for an extension in writing though if you need it. This should be done to the Assistant Director of the Enforcement Division of the Tax Services Office (TSO).
"These articles provide information of a general nature only. It is only current at the posting date. It is not updated and it may no longer be current. It does not provide legal advice nor can it or should it be relied upon. All tax situations are specific to their facts and will differ from the situations in the articles. If you have specific legal questions you should consult a lawyer."