Are you considering a voluntary disclosure (VDP or tax amnesty application) to the Canadian tax department for unflled Canadian income tax returns or undeclared income, but are feeling confused due to all of the conflicting information on the internet? Are you afraid of a sinister "tax man" or "tax police" in dark glasses waiting to pounce on you and throw you in jail for tax evasion or not filing tax returns? Nothing could be further from the truth. You CAN sleep at night, despite the fear mongering that you may have seen to the contrary.
I have been a Chartered Professional Accountant (CPA) since 1977 and a Canadian tax lawyer since 1982. I have submitted VDP applications on behalf of hundreds of Canadian taxpayers since the early 1990s. I have publicized and demystified the tax amnesty procedures on my website since 1997.
Here is some straight talk about he CRA voluntary disclosure (tax amnesty) program. If you are still confused contact our Toronto tax law firm for a 10 minute no charge phone call.
What CRA department administers the VDP?
The audit directorate of the Canada Revenue Agency (CRA) administers the voluntary disclosure program in Canada. This is NOT the department that investigates tax evasion and prosecutes tax evaders. The so-called "tax police" is the Investigations Division of CRA. The Investigation Division has nothing to do with tax amnesty processing.
Can a CRA employee reject a valid application?
CRA’s employees have NO discretion to reject an application if the criteria are met. The CRA has published "Voluntary Disclosure Program Guidelines" on September 30, 2002 and modified them on October 22, 2007. The Federal Court of Canada will enforce these guidelines if not properly applied. We have successfully appealed to the Federal Court in cases where the guidelines were not followed by the tax department.
Does CRA prosecute tax amnesty applicants?
CRA absolutely does not prosecute VDP applicants. The purpose of the CRA Voluntary disclosure of Canadian tax amnesty program is to encourage taxpayers to voluntarily comply with their obligations to report all income and to file tax returns. Tax evasion prosecution would defeat the purpose of this VD program. It would also be contrary to the published guidelines that make it clear there will be no prosecution. Published statistics from the tax department shows that for 2008-2009 CRA referred 164 income tax and GST/HST investigations to the Public Prosecution Service of Canada. During this same time period there were over 11,000 voluntary disclosures submitted. These prosecutions were for taxpayers who were caught evading taxes, or who were sent requests and demands to file tax returns and ignored the demands. The prosecutions are NOT as a result of submitted VDP applications.
I’m still confused – what should I do? Don’t worry, sleep at night, contact our experienced Toronto tax lawyers by phone or e-mail orjust click here for the inquiry form and we’ll be glad to answer any voluntary disclosure questions you may still have.
"This article provides information of a general nature only. It is only current at the posting date. It is not updated and it may no longer be current. It does not provide legal advice nor can it or should it be relied upon. All tax situations are specific to their facts and will differ from the situations in the articles. If you have specific legal questions you should consult a lawyer."