Canada: Voluntary Disclosure

Last Updated: January 5 2016

VDP or Voluntary Disclosure Program is a plan of the CRA or the Canada Revenue Agency. In this program, taxpayers in Canada can correct or make changes to the tax returns they have already filed. They can also reveal information that has not been provided to the CRA before while they were filing their tax returns. It gives Canadian taxpayers a second chance to come forward on their own and amending the return filed with no penalties on the taxes owed or criminal prosecution. The information published by the CRA is often contradictory about the penalty relief. This often confuses taxpayers who are thinking of opting for the Voluntary Disclosure Program.

This is what the CRA states:

"If the CRA accepts a disclosure as having met the conditions set out in this policy, it will be considered a valid disclosure and the taxpayer will not be charged penalties or prosecuted with respect to disclosure. And on the other hand, it states in the same publication that .the Minister does not have to grant relief under the VDP provisions. Each request will be reviewed and decided on its own merit. If relief is denied or partly granted, the CRA will provide the taxpayer with an explanation of the reasons and factors for the decision."

It's essential to get consult a professional income tax lawyer. Of course, you do not want to be accepted into the Voluntary Disclosure Program and later told by the CRA that the penalty charges would be waived just partially or not at all.

Our experienced Toronto tax law firm can tell you what you can expect from your dealings with the CRA. A professional Canadian tax lawyer at our firm can tell you whether you qualify to be a part of the Voluntary Disclosure Program at all. And of course, we are going to defend your rights while we are representing you in all dealings with the CRA.

Our top Canadian tax law firm serves both self-employed individuals and businesses. Initial general e-mail or phone response is free. So here's your opportunity to get all your questions and concerns answered. All consultations are completely confidential whether you finally choose us or not.

Voluntary Disclosure Program Disclosures

According to the Voluntary Disclosure Program, disclosures can be made for excise taxes, income tax filings, source deductions, excise duties under various statutes and GST/HST filings. Canadian taxpayers will have to still make all necessary tax payments, and interest charged (possibly at a reduced rate) to the CRA. But there will be no criminal prosecution.

Does The CRA Accept All Voluntary Disclosure Program Applications?

No. CRA does not accept all VDP applications. You'll have to meet some requirements for the CRA to accept the disclosure you are making, and for you to benefit from the no criminal charges or penalties clause. However, this depends on the specific authorized VDP agent. In other words, that person is going to decide whether you have met all the requirements and whether your application is going to be accepted or not.

Is There Any Time-Limit for Providing Information and Documentation for the Disclosure, So That the Application Is Not Rejected?

You'll have a 90-day time limit. It begins with the EDD or the Effective Date of Disclosure. This is the day when the CRA has received the completed application submitted by your authorized Canadian tax lawyer.

You may ask for an extension in writing if you need it.

Case Studies

Our Ontario tax law firm was contacted by John from Oakville who had been charged with commercial fraud and had not reported the income from that fraud. We advised him that income from criminal activities is fully taxable and that the police always reported this type of activity to CRA. Our Toronto tax lawyers submitted a voluntary disclosure for the unreported income and he was able to avoid prosecution for tax evasion and incurred no penalties.

Jeanne from Toronto approached our Canadian tax law firm on behalf of her mother who resided in Montreal. Her mother had inherited 2 Swiss bank accounts, one with Swiss francs and the the other with gold bars on the death of her husband. The bank accounts had not been reported to CRA. The advice that our Toronto tax lawyers gave her was to submit no names voluntary disclosures on behalf of the estate and her mother for unreported offshore income and unfiled T1135 offshore asset forms. We convinced CRA to limit the disclosure to the past 10 years, the tax department did not charge penalties and reduced the rate of interest charged on the unreported income.

C immigrated to Canada from Israel in the 1980s after working for a number of years in Africa and settled in Toronto. He had opened Swiss bank accounts to deposit his African earnings. He did not know that as a Canadian resident he was required to report his worldwide income and offshore assets in excess of $100,000. He and his wife M also inherited a condo and funds in Israel. Our Canadian tax lawyers submitted a voluntary disclosure on behalf of C and M and retained an accountant to prepare the tax returns and T1135 forms. We had extensive discussions with CRA about the number of years to file and persuaded them to limit the tax returns to 10 years. C and M did not have to pay any penalties and paid a reduced rate of interest on the unreported offshore income.

Robert is based in Manitoba but works overseas in the oil patch. His employer pays his foreign taxes, but his Canadian accountant did not properly report all of his foreign income due to the tax payments. Our Manitoba income tax lawyers submitted a voluntary disclosure on his behalf and worked with his accountants to submit amended Canadian income tax returns. He avoided all penalties on the unreported offshore income and was charged a reduced rate of interest on the taxes owing.

The information is thought to be current to date of posting. Income tax law changes frequently and content may no longer reflect the current state of the law. This document is not intended to create an attorney-client relationship. You should not act or rely on any information in this document without first seeking legal advice. This material is intended for general information purposes only and does not constitute legal advice. If you have any specific questions on any legal matter, you should consult a professional legal services provider.

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The following questions and answers are based on the proposed measures that were announced on December 7, 2015.
The official Government website of the CRA.
This guide is for any person who deals with the Canada Revenue Agency (CRA). The guide gives you information on the 16 rights set out in the Taxpayer Bill of Rights and explains what you can do if you believe that the CRA has not respected your rights.
The Office of the Taxpayers' Ombudsman (OTO) works to enhance the Canada Revenue Agency's (CRA) accountability in its service to, and treatment of, taxpayers and benefit recipients through independent and impartial reviews of service-related complaints and systemic issues.
Ontario personal income tax is an annual tax collected from individuals who are Ontario residents on the last day of the tax year or have income earned in Ontario for the tax year.
The following documents provide instructions for filing your 2015 income tax return.
If you earned income in B.C. or operated a Corporation with a permanent establishment in B.C. last year you need to file an income tax return. Find out when you need to file your income tax return, and if any tax credits or rebates apply to you.
Generally, a corporation must file an Alberta corporate income tax return (AT1) for each taxation year during which it has a permanent establishment in Alberta.
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