What is the Voluntary Disclosures Program (VDP)?
The Voluntary Disclosures Program (VDP) gives you a second chance to change an incorrect tax return you previously filed, or to file a return that you failed to file. The Voluntary Disclosure Program allows you to apply to the CRA to ask for relief of prosecution, interest, and penalties relating to your omission.
Essentially, the program allows you to come forward on your own to inform the CRA that you may have omitted income in your previous return or you may have omitted that you own foreign property or assets, without being levied with severe penalties.
When is the Voluntary Disclosure Program Used?
If you own foreign property, have foreign income, or hold shares in a foreign corporation, you are required to file information disclosures with your tax returns to the CRA each year. For whatever reason, many individuals fail to file these disclosure forms each year. To correct these omissions, VDP is recommended.
Criteria to be Afforded Entry into the Program
To qualify for relief, the application must be voluntary and be complete. Under the new VDP rules effective March 1, 2018, the disclosure must also accompany payment of the estimated tax owing.
By “voluntary,” the CRA must not have contacted you regarding the improper filing or failure to disclose. The moment you receive a letter or call from the CRA regarding your failure to file correctly, you are disqualified from the program.
Why Does CRA Administer this Program?
The CRA introduced the program as a means for people to come forward without the CRA having to catch the nondisclosure through an audit or other mechanisms. By being honest about your taxes, the CRA did not have to spend resources locating and auditing you. In exchange, the CRA will agree to waive all or part of the imposed penalties.
Why You Need a Tax Lawyer
First, our tax lawyers specialize in the Voluntary Disclosure Program & will determine whether you are eligible for the program. If you are, our tax lawyers submit the application ensuring that it meets the requisite criteria for entry into the program. Once accepted into the program, we coordinate the filing of your past returns or information disclosures, as well as coordinate payment arrangements on the outstanding amounts owed, if any.
Since one is exposing him or herself to by providing potentially incriminating information to a governmental authority, hiring a tax lawyer with expertise in statutory tax law is critical for all taxpayers interested in making a disclosure to the CRA’s Voluntary Disclosure Program.
Don’t get caught for tax evasion. There are ways to come forward and correct past filings voluntarily, without being levied harsh penalties. Coming forward with a VDP will also remove the stress and anxiety you suffer from not knowing if the CRA is going to come after you. In this way, you take back control.
- be voluntary. If the CRA has asked for information or discovers information from a third party, then you no longer qualify for the VDP. If the CRA has sent you a letter in the mail regarding your returns or you at all have information that the CRA may be close to discovering your incorrect information, you are disqualified from entering the program.
- be complete. You must include information related to all years that you believe that taxes are owing. If the CRA discovers additional years where taxes are owing, you will no longer qualify for relief for the years that were disclosed.
- must involve a potential penalty or interest
- include information that is at least one year past due for income tax applications; and
- include payment of the estimated tax owing.
Omitted your income from the CRA? We’re here to help™.