Last week, the Canada Revenue Agency (the
"CRA") issued its annual report to
Parliament. Among other matters, the CRA reported on the
performance of its Voluntary Disclosures Program (the
The VDP permits taxpayers to voluntarily disclose historical
non-compliance, and correct tax reporting and payment deficiencies,
in exchange for penalty (and possible interest) relief. (For a
detailed summary of the VDP, please see our article on the program
The CRA stated in its annual report that there has been a
significant increase in the number of voluntary disclosures made
under the VDP. In particular, the CRA reported that over the past
More than $1.3 billion of unreported income was voluntarily
disclosed under the VDP – a 65% year-over-year increase in
the amount of unreported income disclosed under the program.
$780 million of the unreported income disclosed under the VDP
was attributable to offshore holdings – a 157% increase in
such disclosures over the previous year.
19,134 voluntary disclosures were made under the VDP,
representing a 21% increase in disclosures over the prior
While the CRA did not provide detailed figures on the penalties
and interest waived under the VDP, it did report that it levied
gross interest and penalties under the Income Tax Act (Canada) of
almost $4.8 billion over the past year. Of that amount, the CRA
reported that it waived federal interest and penalties of almost
$275 million under various statutory programs, including the
The CRA attributes the ongoing increase in the number of
voluntary disclosures to several factors, including the heightened
efforts of the CRA to share data with foreign tax administrators,
the agency's enhanced audit activities, and the use of advanced
risk profiling algorithms.
The CRA also expressly referenced its new Offshore Tax Informant
Program (the "OTIP"). The OTIP offers
financial awards to individuals who provide information relating to
certain types of major international tax non-compliance. The CRA
indicated that, over the past year, it received 1,920 separate
contacts from potential informants under the OTIP, which led to
over 200 written submissions and 110 cases that are currently being
The VDP (and the equivalent programs offered under provincial legislation) continue to represent functional and pragmatic avenues for taxpayers to address past tax reporting and payment deficiencies.
The foregoing provides only an overview and does not
constitute legal advice. Readers are cautioned against making any
decisions based on this material alone. Rather, specific legal
advice should be obtained.
The CRA provides new housing rebates for individuals who have purchased or built a new house or have substantially renovated a house or made a major addition to a house who plan on living in it personally or letting a relative live there.
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