I received an interesting call late Friday afternoon from a Canadian taxpayer who wanted to know more about the Canada Revenue Agency’s Voluntary Disclosure Program.
She said that she thought she was being “swindled”.
She called a “tax solution” type business and they said that for $3,000.00, they would “investigate” as to whether or not she qualified for the program.
To which I asked her this question;
“Has the CRA tried to get you to file outstanding returns, either by phone or by sending letters to you?”
“Yes”, she replied.
“Then you do NOT qualify for the program” was my response.
And I saved her $3000.00.
If the CRA has already reach out to you – or attempted to reach out to you – regarding unfiled returns or unreported income, then your disclosure is no longer voluntary.
For more information, read up on the CRA’s Voluntary Disclosure Program, through the CRA’s website, here. Or Google “CRA VDP” and refer to the websites beginning with http://www.cra.gc.ca, or http://www.CRA-arc.gc.ca/voluntarydisclosures
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There are news the VDP will be tougher after CRA completes a review by March 31, 2017. The review will be based on the recommendations by the Offshore Compliance Advisory Committee. With that in mind, if someone submits their VDP prior to March 31, would they be grandfathered under the old rules?
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Hi Jolie. Great question!
The news you hear about the toughening of the VDP regulations are specific to offshore accounts, and even more specific to those mentioned in the Panama Papers. The CRA is certainly feeling the pressure from the public about these hidden overseas accounts and have vowed to not allow them to use the VDP regulations to get away from paying penalties.
What’s been missing from the public discussion about many offshore accounts is that either they have been reporting the income to the CRA or have been closed for too many years for the CRA to take legal actions against the registered owners.
The best way to save face is to deny everyone from using VDP going forward.
That being said, I do not see the regulations changing and thus no need to grandfather (or grandmother) anyone into the program as a result.
Hope this helps!
Warren
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Thanks for your quick reply Warren. It is just that I read the Committee concluded onshore and offshore non-compliance should be treated similarly. But if one reads the other recommendation “Less Generous VDP Relief”, it really seems to aim at sophisticated taxpayers with offshore accounts.
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Hi Jolie,
Absolutely, there has been a lot in the news about toughening the VDP requirements to prevent those who are knowingly hiding income from getting penalty free access to the CRA. In actual fact, there has always been that deterrent in place, and it’s called criminal prosecution. When the CRA comes across people who are hiding money offshore, after all they have done and said about cracking down, it sets up those people for instant prosecution and gross negligence penalties.
The CRA has the power and knows how to use it.
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