A recent federal investigation of Canadian retail pharmacists who received incentives from generic drug firms looking for shelf space has uncovered more than 1,000 who failed to declare and pay the taxes due on $58 million in rebates and incentives, leading to penalties for significant number.
An article from CBC News, released last Thursday, states the four-year long investigation began after the Canada Revenue Agency discovered the scale of the problem “when auditors found 15 pharmacies in Newfoundland and Labrador that had failed to report the incentives.” Further investigation led to an expansion to all four Atlantic provinces, and later across the county.
While no charges have been laid thus far, penalties for non compliance and failure to report income are pending, and with the staggering amount undeclared, those penalties stand to be significant.
You can read the article in full here: http://www.cbc.ca/news/politics/generic-drugs-pharmacies-canada-revenue-agency-tax-penalties-1.3667050.
Something to keep in mind: according to the article, “CRA auditors had expected the Canada-wide operation to flush out about $75 million in unreported rebates and incentives, but so far the amount has fallen short – just over $58 million.” This means the investigation has not yet concluded.
If you find yourself concerned about this ongoing probe, your best course of action is to take advantage of the Voluntary Disclosure Program, a program through which the CRA grants the ability to voluntarily disclose previous discrepancies or unreported income (in this case, undeclared incentives), which can help cancel penalties, reduce interest and prevent the CRA from taking unwanted legal action.
One caveat: you need to contact the CRA before they contact you. If you have received a notice regarding a reassessment or acknowledgement of outstanding penalties as a result of this, you may be too late. Disclosure must be completely voluntary, meaning the CRA must have no previous awareness of said discrepancies.
Want to find out more? Tax Solutions Canada can help you determine if you qualify for the Voluntary Disclosure Program and how to get started. Contact us today by calling 1-888-868-1400.