What is the CRA Voluntary Disclosure Program?
The CRA Voluntary Disclosure Program can be a second chance for you to correct your tax return or file a return that you missed. There are however strict requirements that must be met for a voluntary disclosure to be valid. Contact Farber Tax to explain the entire CRA Voluntary Disclosure Process to you.
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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 that not filing will delay having to pay the Canada Revenue Agency (CRA).
The reality is that the CRA will find you, whether you file your taxes or not.
If you have not filed previous returns, 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. And if you don’t file, the agency could consider your actions to be tax evasion, which is a crime. That’s why it’s important to file your taxes correctly each year.
In some cases, a person may have made an error in a prior year tax return. This error could be an accident or it could have been purposeful. Regardless of why the error was filed, it’s important to know that the CRA can go back up to three 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). This program allows you to complete or correct prior year returns. If you are accepted to the VDP, you will be exempt from criminal prosecution and you could have certain penalties and charges against you dropped.
About CRA Voluntary Disclosure
The CRA Voluntary Disclosure Program is 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
If any of the above tax problems 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. Otherwise, you cannot apply to be admitted to the CRA Voluntary Disclosure Program.
The Voluntary Disclosure Form & How To File
To qualify under the CRA Voluntary Disclosure Program, you must satisfy the following criteria:
- The tax year in question must be at least 1 year old
- The voluntary disclosure must involve a penalty
- The disclosure to the CRA 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. For the disclosure to be voluntary, the CRA must not have attempted to contact you by phone or by mail about the tax year in question, attempted to enforce action against you, and/or contacted or pursued enforcement action against a party related to you, such as a corporation, spouse or partner. The disclosure must also be complete, which 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 your VDP application 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 and your application would be rejected.
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.
Applying to the Voluntary Disclosure Program
Two forms that are important to the CRA Voluntary Disclosure Program are form RC199 (which is the Voluntary Disclosures Program Application) as well as form T1135. A voluntary disclosure T1135 application is required when the disclosure relates to foreign income. However, the process isn’t as simple as just downloading form RC199, filing it out, and waiting.
The CRA has recently been cracking down on people who it believes are willfully evading taxes. There is a significant difference between not completing your taxes correctly due to an error and purposely misrepresenting your income or assets on your tax return. If the CRA believes that there is an element of intentional conduct, your application may only be accepted as part of the Limited Program of the VDP. This means that you will still be exempt from criminal prosecution if you make a disclosure, but other interest charges and penalties will still apply.
To make sure that your application is completed correctly, and to ensure that you have the best chance of being accepted into the VDP program, it is best to work with an experienced tax professional.
Help with a Voluntary Disclosure Program Application (Form RC199)
Our team has a proven track record of resolving tax situations.
When you consult with Farber Tax Solutions, 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. If you are accepted into the standard program (rather than the limited program), the CRA will likely drop penalties such as late filing charges and you will only be responsible for the amount you owe 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.
Farber Tax Solutions can help you successfully deal with CRA problems. We utilize the experience of our tax experts to:
- 1| Offer a comprehensive solution that is focused on achieving the most favourable possible outcome for your tax issue;
- 2| Communicate with the CRA on your behalf and navigate the entire CRA dispute process; and
- 3| Offer a complete solution to your tax problems, including ex-CRA professionals, lawyers, and experienced accountants.