What is the Voluntary Disclosure Program?
The voluntary disclosure program is designed to provide relief to taxpayers who have failed to properly file their tax returns either because of an error or omission so long as the CRA hasn’t already contacted you or started an action against you.
Most taxpayers can use the VDP including individuals, employers, corporations, partnerships and trusts.
Why would I use it?
Depending on your overall circumstances you may want to use the VDP to avoid prosecution by the CRA for failure to disclose all of your income and/or to provide full or partial relief on interest and penalties depending on the situation you find yourself in.
What situations would qualify for a VDP?
The VDP can help with many situations for individuals and businesses including the following:
- Failing to file a tax return by the due date
- Failure to disclose all income earned in the year (including foreign income while you were a resident of Canada) as required under the income tax act.
- Claiming expenses that are not eligible and/or overstating your expenses
- Failing to file required information returns such as a T1135 – Foreign income verification statement
- Failing to collect, remit and/or properly withhold source deductions
- GST/HST not being charged, collected and/or reported when required to do so.
- Claiming ineligible input tax credits (ITCs) or other refunds or rebates such as ITCs on personal expenses.
The VDP is a great program for taxpayers who want to come clean with the CRA and fix their mistakes before CRA catches them. With the many robust systems and tools that the CRA has at their disposal, It’s not likely a question of if you will be caught it’s when you will be caught so it’s better to come clean and make amends before the CRA starts investigating you.
Depending on your situation the VDP may not be right for you or available to you but there is another program called the Taxpayer Relief Program which I will touch on in my next blog.
At Premier Professional Accounts we have helped a number of clients navigate their tax situations to clean up past issues and move forward to avoid these situations in the future.
With 20 years and counting of industry experience working in the field of accounting and taxation, Shawn P. Stemmler brings a depth of knowledge in government legislation including the Income Tax Act, Excise Tax Act, Employment Standards Act, and more to the table when serving our clients.
Shawn’s addition to the Premier Professional Accountants team in 2021 has been a welcomed addition for our clients. He’s quickly put his tax compliance knowledge to great use in helping clients navigate relationships with his existing client base and the clients of Premier Professional Accountants Inc.