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If you know that you’ve made a mistake on a return, made incorrect claims, or haven’t filed in years, the Voluntary Disclosures Program (VDP) may be an important resource for correction and protection. It gives you a chance to revise a tax return you have already filed or file a return that is overdue. By making these changes, the Canada Revenue Agency may grant relief from prosecution and penalties.

That being said, proposed changes to the program will make it far more demanding.

Back in December, the Offshore Compliance Advisory Committee released a report which called for a series of changes to the Voluntary Disclosures Program (VDP). In particular, the committee said there should be harsher penalties for those taxpayers who used offshore vehicles, hid large amounts of income or did so for a number of years, such as those identified in the Panama Papers.

These changes, which have now made VDP unavailable for some evaders, would also require users of the program to disclose any information on an accountant or adviser who helped them to engage in tax evasion or avoidance in an effort to find other taxpayers who may have broken the rules. The recommendations also suggested taking a more in-depth look at all VDP applications, especially those that seem more complex.

Whether or not the CRA will adopt these recommendations is still on the table, meaning those looking to take advantage still have time to apply under the current system.

Individuals interested in taking advantage of the Voluntary Disclosures Program must satisfy the following four conditions in order for a disclosure to be considered by the CRA:

  • Disclosure must be voluntary. You must disclose the error or omission before any communication has occurred between you and the CRA.
  • Disclosure must involve a penalty. If a penalty would not be imposed on the information in the disclosure, a VDP isn’t necessary.
  • Disclosure must include information that is at least one year overdue.
  • Information in the disclosure must be complete. A disclosure is considered complete if it provides a full and accurate account of all previously inaccurate, incomplete or unreported information.

You can choose to make a voluntary disclosure on your own by filing Form RC199, but just be aware that, since this will make the CRA aware of your situation, it needs to be done correctly the first time – there are no do-overs here. Once you’ve made the CRA aware of the issue, you can’t take that back. If you make any mistakes on your VDP application, you will have alerted the CRA and taken away all chances for relief.

Our advice is to have the voluntary disclosure prepared by a professional, one with the knowledge and experience regarding what the CRA is looking for and how to best protect yourself.

At Tax Solutions Canada, we have years of experience with the Voluntary Disclosures Program and know the best practices when it comes to completing an application. Don’t wait. Get it touch with us today. 1-888-868-1400.