Tax Lawyer Toronto - All About the Voluntary Disclosure Program
The Canadian Revenue Agency provides taxpayers with a great chance to "come clean" and report deficiencies in their Canadian tax filings. Nevertheless, the criteria for a valid voluntary disclosure are imposed by the CRA and failure to meet these criteria could result in the voluntary disclosure being rejected and the assessment of complete penalties and interest against the taxpayer. Taxpayers thinking of a voluntary disclosure must come forward as soon as possible, since it is actually too late to come forward if any prosecution action has been commenced against the taxpayer or a related party.
Further, a voluntary disclosure should not only be substantially complete, it should be completed on a timely basis. Canada's voluntary disclosure program is designed to give taxpayers who are not under audit the chance to come forward and correct erroneous or incomplete information or to disclose previously unreported information, without prosecution or penalty. Once the Canada Revenue Agency (CRA) accepts a disclosure as voluntary, no tax evasion charges will be laid or fines imposed and only the unsettled tax and interest should be paid. The CRA may also lessen or waive some of the accumulated interest for years preceding the most recent three or four years. An individual who wishes to make a voluntary disclosure should do so in writing by mail or fax to the VDP at the designated Tax Centre that has power over the area in which the individual lives. Even though lots of disclosures are made on a €named€ basis, (the individual's identity is provided to the Canadian Revenue Agency when making the disclosure,) it is also possible to make a €no-name€ anonymous disclosure to initiate discussion with the CRA.
An anonymous disclosure allows the individual's advisor to explore the implications of disclosure with the CRA on a hypothetical basis. Nevertheless, negotiations conducted before the individual is identified and the CRA has complete information are quite limited. The identity of the individual should be provided within 90 days from the effective date of disclosure. If all other conditions have been met, the individual is protected from fines and prosecution, starting on the effective date. A final submission of the disclosure is also expected to be provided within these 3 months days. Once the Canadian Revenue Agency has a complete file, a VDP officer can make a decision and will provide the individual with written notice of the decision with an explanation. If the voluntary disclosure is accepted, the CRA issues an assessment. If the disclosure is rejected, the file is referred to investigations or audit.
An individual may request the director of the Tax Centre where the original decision was made to review and reconsider the decision. It is also possible to look for a Federal Court judicial review of the VDP officer's initial decision or the decision of the director. People may appeal an assessment or reassessment made as a result of a disclosure, but not with respect to the waiver of fine or interest.
Further, a voluntary disclosure should not only be substantially complete, it should be completed on a timely basis. Canada's voluntary disclosure program is designed to give taxpayers who are not under audit the chance to come forward and correct erroneous or incomplete information or to disclose previously unreported information, without prosecution or penalty. Once the Canada Revenue Agency (CRA) accepts a disclosure as voluntary, no tax evasion charges will be laid or fines imposed and only the unsettled tax and interest should be paid. The CRA may also lessen or waive some of the accumulated interest for years preceding the most recent three or four years. An individual who wishes to make a voluntary disclosure should do so in writing by mail or fax to the VDP at the designated Tax Centre that has power over the area in which the individual lives. Even though lots of disclosures are made on a €named€ basis, (the individual's identity is provided to the Canadian Revenue Agency when making the disclosure,) it is also possible to make a €no-name€ anonymous disclosure to initiate discussion with the CRA.
An anonymous disclosure allows the individual's advisor to explore the implications of disclosure with the CRA on a hypothetical basis. Nevertheless, negotiations conducted before the individual is identified and the CRA has complete information are quite limited. The identity of the individual should be provided within 90 days from the effective date of disclosure. If all other conditions have been met, the individual is protected from fines and prosecution, starting on the effective date. A final submission of the disclosure is also expected to be provided within these 3 months days. Once the Canadian Revenue Agency has a complete file, a VDP officer can make a decision and will provide the individual with written notice of the decision with an explanation. If the voluntary disclosure is accepted, the CRA issues an assessment. If the disclosure is rejected, the file is referred to investigations or audit.
An individual may request the director of the Tax Centre where the original decision was made to review and reconsider the decision. It is also possible to look for a Federal Court judicial review of the VDP officer's initial decision or the decision of the director. People may appeal an assessment or reassessment made as a result of a disclosure, but not with respect to the waiver of fine or interest.
