Canada: Canada Revenue Agency Proposes Sweeping Changes To Voluntary Disclosures Program


On June 9, 2017, Canada's Minister of National Revenue and the Canada Revenue Agency ("CRA") announced consultations on proposed changes to the Voluntary Disclosures Program ("VDP") that is administered by CRA. The announcement follows reports from the House of Commons Standing Committee on Finance (October 2016) and the Offshore Compliance Advisory Committee (December 2016) recommending, respectively, a comprehensive review of the VDP and various specific changes to the VDP to tighten the criteria for acceptance into the program. The changes are largely described in draft Information Circular IC00-1R6 (for voluntary disclosures relating to income tax) and in draft GST/HST Memorandum 16.5 (for voluntary disclosures relating to other taxes, including GST/HST and excise duties and taxes).

Stakeholders are encouraged to provide input on the proposed changes within the 60-day consultation period which began on June 9, 2017. It appears that the final changes are intended to have effect after December 31, 2017.

The Existing VDP

The VDP is a form of amnesty program that allows taxpayers to come forward to report various tax omissions to CRA in order to avoid penalties and prosecution and, in many cases, to obtain some interest relief. Currently, the VDP is generally available to all taxpayers regardless of the reasons for the tax non-compliance, so long as the following four conditions are met:

  1. the disclosure is voluntary — the disclosing taxpayer must commence the process before becoming aware of compliance action;
  2. the disclosure involves the application (or potential application) of a penalty;
  3. the disclosure includes information that is at least one year overdue; and
  4. the disclosure is complete, in the sense of providing full and accurate facts for all taxation years or reporting periods for which there was tax non-compliance, across all accounts with which the disclosing taxpayer is associated.

A disclosure can be commenced as a "named" disclosure by providing the name of the disclosing taxpayer at the time the process is initiated, or as a "no-name" disclosure by providing general information at the time the process is initiated and revealing the name of the disclosing taxpayer within 90 days. In either case, disclosing taxpayers generally receive protection from penalties and prosecution from the time the disclosure process is commenced.

Some Key Proposed Changes

It is clear that CRA intends to narrow the availability of the program and to restrict its benefits in large part as a response to what CRA perceives as the growth of tax evasion and aggressive tax avoidance. Among the most important of these proposed changes are the following:

1. Limited Benefits for Disclosures Involving "Major Non-compliance"

For disclosures involving income tax, CRA is proposing to introduce two "tracks": the "General Program" and the "Limited Program". Under the General Program, a valid voluntary disclosure will normally result in the elimination of penalties, relief from criminal prosecution, and interest relief in the amount of 50% of the otherwise applicable interest for years preceding the three most recent years of returns required to be filed.

Under the Limited Program, a valid voluntary disclosure will normally result in the elimination of gross negligence penalties (i.e., other penalties will still be imposed) and relief from criminal prosecution, but no interest relief will be granted.

The Limited Program is proposed to be implemented for disclosures that that involve what CRA is calling "major non-compliance", which is described as circumstances that include one or more of the following situations:

  • active efforts to avoid detection through the use of offshore vehicles or other means;
  • large dollar amounts;
  • multiple years of non-compliance;
  • a sophisticated taxpayer;
  • the disclosure is made after an official CRA statement regarding its intended focus of compliance or following CRA correspondence or campaigns; and/or
  • any other circumstance in which a high degree of taxpayer culpability contributed to the failure to comply.

Accordingly, many of the income tax omissions that are currently eligible for full relief under the VDP will, under the proposed changes, be eligible for a narrower range of relief.

Similar changes are proposed for non-income tax voluntary disclosures.

2. Additional Condition for a Valid Voluntary Disclosure

CRA is proposing to add a fifth condition for a valid voluntary disclosure — the payment of the estimated tax owing. If the disclosing taxpayer cannot pay the estimated tax at the time of making the disclosure, a payment arrangement supported by adequate security "may" be considered "in extraordinary circumstances with approval from CRA Collections officials."

3. No VDP Relief for Larger Corporations

For disclosures involving income tax, CRA is proposing that the VDP will not be available for a corporation with gross revenue in excess of $250 million in at least two of its last five taxation years. This restriction is not proposed to apply for non-income tax voluntary disclosures (eg. disclosures involving GST/HST).

4. No Protection During the "No-name" Period

It appears that CRA is proposing to eliminate the protection of the VDP during the period before which a disclosing taxpayer reveals their identity. Disclosing taxpayers are provided with the opportunity to participate in no-name, general, informal and non-binding preliminary discussions to gain "insight into the VD process, a better understanding of the risks involved in remaining non-compliant, and the relief available under the VDP". However, it appears that the protection of the VDP is proposed not to apply during this period. In particular, CRA indicates that the preliminary disclosures do not constitute acceptance into the VDP and have no impact on CRA's ability to audit, penalize or prosecute the non-compliance.

Based on the proposals to date, in many cases it will be difficult to see the benefit of these no-name preliminary discussions.

5. Disclosure of Advisors

For both income tax and non-income tax disclosures, CRA is proposing that where a disclosing taxpayer received assistance from an advisor in respect of the subject matter of the disclosure, "the name of that advisor should generally be included in the application". It is unclear whether disclosure of the name(s) of advisors is proposed to rise to the level of a precondition for making a valid voluntary disclosure, but CRA also takes great pains to point out that disclosing taxpayers who do not co-operate by providing requested documentation risk becoming ineligible for voluntary disclosure relief.

6. More Limited Rights of Objection

Under the current VDP, a disclosing taxpayer who disagrees with an assessment or reassessment that results from a voluntary disclosure is free to file an objection from the assessment or reassessment. There are no general restrictions on this entitlement that are set out in the current public administrative pronouncements for the VDP.

CRA is now proposing to limit rights of objection for voluntary disclosures involving "major non-compliance", such as income tax voluntary disclosures in the Limited Program track. For these disclosures, CRA will require the disclosing taxpayer to waive their right to object in relation to the specific matter disclosed and any related assessment of taxes. The restriction does not apply if (i) the assessment includes a calculation error, (ii) the assessment relates to a characterization issue (e.g., income versus capital gain treatment, or taxable versus exempt supply for GST/HST purposes), or (iii) the assessment relates to an issue other than the matter disclosed.

These changes, among others, reflect a significant narrowing of the benefits of a voluntary disclosure, particularly for disclosures that involve "major non-compliance". Many of the proposed changes are vague and imprecise, which would create uncertainty for taxpayers that might otherwise initiate a disclosure. Other changes (such as the requirement for up-front payment of the estimated tax owing) can lead to harsh results in many circumstances, which may discourage many taxpayers from coming forward at all.

In the meantime, taxpayers and their advisors should follow these developments closely. Taxpayers with current unreported non-compliance may wish to consider initiating voluntary disclosures before the finalized VDP changes take effect.

About BLG

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions