If you have, for whatever reason, failed to report all of your taxable income, have claimed expenses or deductions you were not entitled to, or have even failed to report foreign income that is taxable in Canada, stress is probably a regular fixture in your life. It is well known that the Canada Revenue Agency is incredibly determined when it comes to getting money owed, and the resources they have on hand make finding it easier than many of us care to admit.
Thankfully, the Canada Revenue Agency does offer second chances. Any of the above scenarios are examples of tax evasion, which is a serious charge that can involve significant penalties and even jail time. Fortunately, you have a chance to come clean through the Voluntary Disclosure Program.
The Voluntary Disclosure Program is offered by the CRA to give Canadian citizens the chance to report on inaccurate or undisclosed information, voluntarily, in exchange for relief of penalties and disciplinary action. Since penalties can be quite steep, this is an important avenue for recourse.
There are a few stipulations. Individuals interested in taking advantage of the Voluntary Disclosure Program must satisfy the following four conditions in order for a disclosure to be accepted by the CRA:
- Disclosure must be voluntary. The taxpayer must disclose the error or omission before any enforcement activity has been initiated. Enforcement activity includes any audit, investigation or collection activity under any program administered by the CRA or other federal and provincial tax administrations. For example, if you’ve already received a notice of reassessment, disclosure would no longer be considered voluntary.
- 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 – anything from the current tax year isn’t really relevant.
- 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. Don’t even consider picking and choosing what to include – this will likely result in an audit and a failed application.
Additionally, the Voluntary Disclosure Program is fairly formal. This means that it needs to be done properly, the first time, otherwise you are just alerting the CRA to the issue and not receiving any relief.
Want some help ensuring your application is accurate and complete to ensure the greatest chance of success? Call Tax Solutions Canada today. We have the experience and knowledge to make that second chance count: 1-888-868-1400.