When Is Disclosure to the CRA Voluntary?

The Voluntary Disclosure is a program offered by the Canada Revenue Agency and enables tax payers to disclose undeclared income and avoid penalties.

The process involves two stages. First the taxpayer must make an application to the CRA under the Voluntary Disclosure Program. Within 90 days the CRA will assign an application number and a VDP Officer to the application and will notify the tax payer accordingly. The taxpayer will then have exactly 90 days to submit their returns and paperwork with respect to the tax years in question.

There are four conditions that a tax payer must satisfy in order to qualify under the Voluntary Disclosure program. These conditions require that:

1. The disclosure must be voluntary. Voluntary doesn't simply mean that you decide to tell the CRA about income that you earned that they didn't know about. If the CRA has tried in any way to contact you by mail or telephone to ask you to file returns or for information in connection with a return you have filed; the disclosure would not be considered Voluntary.
2. The disclosure must be complete. If the taxpayer or their representative omits information in the application (even if the omission was innocent) the CRA can reject the VDP application.
3. The disclosure involves the application or potential application of a penalty.
4. The disclosure of information is more than one year overdue.

If you have just reviewed numbers one through four and think that you qualify, this is a great opportunity to come clean with the CRA and avoid big penalties. An application under the Voluntary Disclosure Program should not be taken lightly. This CRA has an official process in place that can be too complicated to navigate on your own. We recommend consulting a professional such as a Chartered Accountant to ensure that your application meets the requirements and to make sure your application is expedited in the manner prescribed by the CRA.

For more information about the Canada Revenue Agency Voluntary Disclosure Program please visit http://www.markfeldstein.ca.

By Mark Feldstein, Chartered Accountant, Mark Feldstein and Associates