What is the CRA Voluntary Disclosure Program?
Most Canadians are required to complete and submit income tax returns each year. However, for a variety of reasons, some people do not do so. Sometimes people forget or do not realize that they are required to file. In other cases, people do not file on purpose because they believe not filing will delay having to pay the Canada Revenue Agency (CRA). (It won’t!)
If you have not filed previous returns, it’s important to note that this changes nothing regarding the fact that you owe the CRA money. In fact, it will likely result in you owing more money due to late filing penalties and interest charges.
In other cases, a person may have made an error in a prior year tax return. This error could be an accident or it could be purposeful. Regardless of why the error was filed, it’s important to note that the CRA can go back up to four years and reassess tax returns. The agency can also go back further if it suspects fraud. If the CRA finds an error in a prior year return, it can charge you a penalty, increase the amount that you owe, or even potentially seek tax evasion charges against you.
As you can see, filing your taxes each year and filing them correctly is important. But what if you haven’t? The good news is that, there is an option available to you. It is called the CRA Voluntary Disclosure Program (VDP).
About CRA Voluntary Disclosure
The CRA Voluntary Disclosure Program designed to give people a chance to correct previous year returns or to file returns that were not filed when they should have been. The Voluntary Disclosure CRA program is available to individuals who:
- Are behind in filing tax returns
- Have filed a past tax return and have failed to declare all income
- Have filed a tax return and declared expenses that they weren’t entitled to
All of the above are tax problems and if any of the above apply to you then you need to address your tax problem as soon as possible. It’s important that you do so BEFORE the CRA comes looking. Here’s why.
In order to qualify under the CRA Voluntary Disclosure Program you must satisfy the criteria as follows:
- The tax year in question must be at least 1 year old
- The voluntary disclosure must involve a penalty
- The CRA disclosures must be voluntary
- The disclosure must be complete
Click here to contact us to see if you qualify for Voluntary Disclosure CRA.
From the above list, points number 3 and 4 are very important. Disclosure must be voluntary means that the CRA must not have attempted to contact you by phone or by mail about the tax year in question. If they have, disclosure is not voluntary. Disclosure must be complete means that you must provide full details of all unfiled or incorrect information. This means that you can’t leave anything out and must give the CRA all applicable information.
For example, if you declared additional income for your small business for the tax year 2007 but you didn’t make a declaration concerning GST or HST (which would become known to the CRA since you disclosed additional income) your disclosure would be incomplete. CRA disclosures are a second chance to correct your record before the CRA comes calling. This means you’ll want to get it right.
Making an application to the CRA Voluntary Disclosure Program is an official process. The CRA Voluntary Disclosure Program can be something great to take advantage of but, if it is not administered properly, you can end up alerting the CRA of your tax problem without protection.
When you consult with Tax Solutions Canada, we will review your case and determine if you qualify under the CRA Voluntary Disclosure Program. If you do, we will administer your voluntary disclosure application. If you don’t, we will recommend different solutions to deal with your tax debt.
If you successfully and correctly file for CRA voluntary disclosure, you may be able to save yourself some money and hassle. The CRA will likely drop penalties such as late filing charges and you will only be responsible for the amount you ow plus interest charges. This can make it easier to pay off your tax debt, which is what the CRA Disclosures program is designed to do.