Canada Revenue Agency Adds Restrictions to Voluntary Disclosure Program

The Voluntary Disclosures Program (VDP) is a form of “tax amnesty” program available in Canada. It allows taxpayers to avoid prosecution and penalties for past failures to report income, gains, GST or certain other tax filings. The rules are about to get stricter so you should not delay if you want to take advantage of this program.

Effective March 1, 2018, the Canada Revenue Agency is creating a new stricter category of voluntary disclosures called the Limited Program. As well, the benefits of voluntary disclosure will be reduced in many circumstances.
The main changes are that:

  • the estimated tax owing must be paid up front
  • relief from penalties will be restricted
  • relief from interest charges on the tax will also be restricted

In addition, the Canada Revenue Agency will now be considering the reasons for the past failure to disclose and will limit the benefits under the VDP if the failure to disclose involved the underground economy, or there was deliberate or wilful failure to pay tax or report. The Canada Revenue Agency will also be considering the level of sophistication of the taxpayer, the dollar amounts involved and the number of years of non-compliance.

These considerations are not part of the current VDP.

Effective March 1, 2018, the Canada Revenue Agency will have much more discretion in handling these disclosures and deciding whether or not you are deserving of relief.

If you have not disclosed foreign investments or you have offshore income that you did not report, or you sold property that you didn’t report, or had business income that was “off the books”, you will want to consider making your voluntary disclosure prior to March 1, 2018.

Contact me if you would like to discuss this further. All discussions are confidential and protected by solicitor-client privilege.

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