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What You Need to Know about the CRA Voluntary Disclosure Program

The CRA’s Voluntary Disclosure Program is designed to give people a “second chance” to change a tax return that has been filed or to file a return that should have been completed and submitted earlier. The program gives people the opportunity to correct any errors in their return, such as any mistakes or omissions made regarding income or expenses, or to file a return that they did not file when they should have.

The program is open to any taxpayer, as long as:

  • The declaration is made voluntarily
    • If the CRA contacts you for information or requests a filing before you apply for the program, you are no longer eligible for voluntary disclosure.
  • You provide complete information
    • You must include all missing information when correcting prior year returns.
  • There is a penalty involved
    • If not disclosing the additional information would not result in taxes being owed or a penalty being assessed, the Voluntary Disclosure Program is not for you.
  • The information on the return is more than a year old
    • The Voluntary Disclosure Program does not apply to current fillings.

The Voluntary Disclosure Program can help people avoid fines or penalties for tax avoidance. However, you are still required to pay whatever tax that you owe. It is a good idea to send these payments to the CRA as soon as you can, as interest charges will continue to grow until you send the payment.

Once you use the program, the CRA expects you to keep your taxes up to date. If you apply a second time, the CRA may review your file.

The Future of the CRA Voluntary Disclosure Program

It is expected that the CRA will make changes to the Voluntary Disclosure program in the near future. These changes will likely reduce the benefits of the program. For example, the Offshore Compliance Advisory Committee recently recommended that penalties should still be imposed in certain situations and that the CRA require that applicants provide information on any accountants or advisers who assisted them with their returns. Changes to the program are expected to be announced later this year.

If you have made errors or omissions on prior year tax returns, the Voluntary Disclosure Program can be a good way to correct your filings and avoid potential penalties or fines. However, much like with any information provided to the CRA, it is important that you take steps to ensure the information is accurate and that you don’t get yourself into any trouble by providing it. The best way to make sure that there are no issues with your disclosure is to contact Tax Solutions Canada today to discuss your situation. Give us a call at 1-888-868-1400.