The Voluntary Disclosures Program is offered by the Canada Revenue Agency to those seeking relief from interest and penalties on a tax debt as yet unknown. It is a program which allows you, the taxpayer, to come forward and disclose information which would result in a debt, penalty and interest. If accepted, you may receive relief from those penalties because of your decision to amend previous inaccuracies.
In granting access, the CRA, through the Voluntary Disclosures Program, is giving you a second chance to come clean about anything previously misstated or unreported in a tax return. This may include unreported income, incorrectly claimed deductions, unfiled returns, or foreign assets –anything which could potentially impact the total monies owed to the federal government.
In order for your VDP application to be considered valid, it must first meet the following four conditions:
- It must be voluntary – this means the application must be submitted prior to receiving any correspondence from the CRA regarding the information being presented. If you have been made aware of a tax debt, your disclosure is no longer voluntary.
- It must involve a penalty. To receive relief from penalties (the overall goal of a VDP application), a penalty must thereby exist.
- It must involve information which is at least one year overdue.
- It must include all information – an application is not considered complete unless you have disclosed all relevant information (you can’t pick and choose what to disclose).
There is a commonly held myth that the CRA will only review information going back 10 years, so anything predating that 10-year period is not required in your application. As stated however, this is a myth, and there is actually no limit on how far back the CRA will go when reviewing or requesting information.
If your application to the Voluntary Disclosures Program is accepted, you may receive full relief of penalties and interest. Since the current penalty is 5% of your 2015 balance owing, and 10% if you were late filing for 2012, 2013, or 2014, plus 1-2% of your balance owing for each full month your return is late, this is a significant savings. However, you will still be required to pay the principal portion of the tax debt.
If you have misstated or unreported income and believe taking advantage of the Voluntary Disclosures Program is in your best interest, call Tax Solutions Canada first. We can help guide you through the complex process and ensure a better chance of success.
Call us today at 1-888-868-1400.