Offshore Tax Informant smWe’ve spoken about it before: the Offshore Tax Informant Program, also known as the CRA Snitch Line. This program is one that often rewards those individuals who bring information to the CRA which results in the discovery of questionable tax activity, namely offshore holdings which are unreported. With an increase in the number of calls this program has been receiving, we thought it prudent to discuss.

Why is this an issue? For those with offshore holdings going unreported, the Offshore Tax Informant Program gives the CRA access to a potential resource through monetary motivation. Tips which lead to successful audits are eligible for a significant cash reward, and so those individuals previously looking the other way may not do so for much longer.

Those without offshore holdings are just as vulnerable. If you’ve been less than honest, withheld information or income on a past filing, you may just make it to the top of the CRA’s hit list, thanks to the Tax Informant Program. Disgruntled ex-spouses, ex-business partners, accountants, suppliers and even past clients have been known to call the CRA Snitch Line to create problems for someone they have a dispute with. Even if your books are clean, a call to the CRA Snitch Line can result in an audit and high costs to you to hire audit representation.

The Voluntary Disclosures Program is a great resource for those concerned about potential calls being made through the Tax Informant Program. It allows individuals to voluntarily disclose information previously unknown to the CRA which would end in a tax debt. In doing so, an accepted application may result in the elimination of interest and penalties.

There are 4 conditions which must be met in order to qualify for the Voluntary Disclosures Program:

  1. Disclosure must be voluntary. There can be no previous correspondence or enforcement action taken by the CRA.
  2. Disclosure must involve a penalty. If no penalty would be imposed on the information in the disclosure, VDP is unnecessary.
  3. Information disclosed must be at least 1 year overdue.
  4. Disclosure must be complete. You must disclose any and all information – selective inclusion will result in rejection.

It is important to remember that submitting an application for VDP is complex, and it needs to be done right, the first time – otherwise you will just succeed in alerting the CRA to your delinquent behaviour.

If you currently have holdings/income streams outside of Canada and are concerned that the Offshore Tax Informant Program may cause trouble in the future, get things straightened out now, while you can still avoid penalties and interest. Call Tax Solutions Canada today for more about the Voluntary Disclosures Program: 1 888-868-1400.

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