Tax Amnesty - Voluntary Disclosure: Tax Tips
What is Voluntary Disclosure or Tax Amnesty ?
A voluntary disclosure, also known as tax amnesty or tax pardon, is a method to allow you to deal with unfilled Canadian income tax or GST returns, or unreported income, without incurring penalties or income tax evasion charges or prosecution. We are Toronto taxation lawyers with extensive voluntary disclosure experience, can assist in any Canadian province, and can meet on a confidential basis to discuss your personal or corporate situation.
If you make a voluntary disclosure about unreported income Revenue Canada will not penalize you
Canada Revenue Agency has a policy that if you make a voluntary disclosure about unreported income they will not penalize you. However you must approach them before any investigation is commenced.
Failed to file income tax returns for several years?
If you have have failed to file income tax returns for several years there are no special problems with Canada Revenue Agency if you approach them under the Voluntary Disclosure Programme.
New voluntary disclosure rules
New voluntary disclosure rules have just been announced by the Canada Customs and Revenue Agency. A taxpayer who makes a voluntary disclosure of a Canadian income tax liability will not be charged penalties. The new policies also now allow for a cancellation of interest in some cases.
Did not file Canadian income tax returns for a number of years?
If you have not filed Canadian income tax returns for a number of years there is no reason to be worried about severe penalties. CRA (the Canadian income tax department) has a policy designed to encourage taxpayers to come forward and make a voluntary disclosure about unfilled tax returns, known as voluntary disclosure or tax amnesty. They will not charge any penalties, just the normal interest due. We are Toronto, Ontario, Canada income tax lawyers who have assisted numerous taxpayers with voluntary disclosures, and can assist in any Canadian province.
New CRA administrative policy with respect to the voluntary disclosure program, relating to ‘‘No Name’’ disclosures
There appears to be a new CRA (the Canadian income tax department) administrative policy with respect to the voluntary disclosure program, relating to ‘‘No Name’’ disclosures. A No Name disclosure is not a valid disclosure until such time as the taxpayer is named. If a No Name disclosure is made and an enforcement action is taken before the taxpayer’s name is disclosed to the CRA, the disclosure will not be treated as a voluntary disclosure, even if the person’s name is disclosed within 90 days of the filing of the No Name disclosure.
Hesitating about filing your Canadian personal income tax return?
If you are hesitating about filing your Canadian personal income tax return (T1) by the deadline because you have not filed returns for previous years, you should make a voluntary disclosure (tax amnesty application) with the Canada Revenue Agency (the Canadian income tax department) and file your next return on time.
Conditions where A voluntary disclosure (tax amnesty) application may be considered to be voluntary
A voluntary disclosure (tax amnesty) application may be considered to be voluntary if a computer generated notice to file a return was generated by the Canada Revenue Agency (Canadian tax department) if the notice was not received by the taxpayer or if a significant amount of time has passed since the date of the last notice and the date of the disclosure.
Taxpayer must only make reasonable best efforts to ensure that disclosure is substantially complete
The position of the Canada Revenue Agency (Canadian tax department) is that a voluntary disclosure (tax amnesty) must be substantially complete in order to be accepted as valid. However a taxpayer must only make his reasonable best efforts to ensure that his disclosure is substantially complete, rather than meet some arbitrary test as to what constitutes completeness.
Voluntary Disclosure (tax amnesty) application
A voluntary disclosure (tax amnesty) application can be submitted to the Canada Revenue Agency (Canadian tax department) for an individual even if the individual is a shareholder or director of a corporation and the corporation is the subject of a request to file returns or an audit.
Voluntary Disclosure program moved from Appeals to Audit
Effective April 1, 2006 the Voluntary Disclosure program (Canadian Tax Amnesty) of the Canada Revenue Agency (the Canadian income tax department) was moved from Appeals to Audit and new personnel took over.
Judicial review of a denial of a Voluntary Disclosure
The Federal Court – Trial Division conducted a judicial review of a denial of a Voluntary Disclosure in the recent case of 334156 Alberta Ltd. v The Queen. The court found that the Canada Revenue Agency (the Canadian income tax department) was justified in denying the application since they had contacted the taxpayer to file the outstanding returns.
If you have filed a false tax return, you can make a Voluntary Disclosure (Tax Amnesty Application) and avoid prosecution and penalties
According to the Canada Revenue Agency (the Canadian income tax department) in 2005-06, Canadian taxpayers were convicted in 293 cases of income tax evasion or fraud. Taxpayers had to pay close to $14.4 million in fines, and were sentenced to more than 33 years in jail. Even if someone else prepares the tax return, the taxpayer is responsible for all the information on the return. Stay away from return preparers who offer you false tax claims. This could include false charitable donations or false child care expense claims, or maybe even false business expenses or losses. If you have filed a false tax return, you can make a Voluntary Disclosure (Tax Amnesty Application) and avoid prosecution and penalties.
Do not file back tax returns without making a VDP application, or you will be charged penalties and full interest
Tax filing season is here. If you are worried about filing your Canadian personal income tax return because of unfiled returns in previous years, you may qualify for the Voluntary Disclosure Program (VDP) also called Tax Amnesty, which eliminates penalties and prosecution and may result in a discounted interest rate. It is important not to file the back income tax returns without making a VDP application, or you will be charged penalties and full interest.
Initial point of contact and intake centre for all Ontario and Nunavut voluntary disclosures (Canadian Tax Amnesty) and related enquiries
As of March 5, 2007, the St. Catharines Tax Services Office, Enforcement Division will be the initial point of contact and intake centre for all Ontario and Nunavut voluntary disclosures (Canadian Tax Amnesty) and related enquiries. Overall, the Voluntary Disclosures Program for Ontario and Nunavut will be handled by the St. Catharines, London and Peterborough-Kingston-Belleville Tax Services Offices - Enforcement Divisions.
CRA released more restrictive new guidelines for the voluntary disclosure program on October 22, 2007
The Canada Revenue Agency (the Canadian income tax department, "CRA") released new guidelines for the voluntary disclosure program (tax amnesty) on October 22, 2007. The rules have become more restrictive in some areas, especially with respect to CRA actions with respect to a related party and enforcement actions by other authorities.
Foreign assets
If you have more than $100,000 (at cost) in foreign you are required to declare the assets on your T1 Canadian personal income tax return and file a form T1135. Foreign assets include US securities held in a Canadian brokerage account. If you did not do so you are subject to penalties, which can be avoided with a Voluntary Disclosure.
eBay sellers who have not reported their online income
The Canada Revenue Agency has won an order in the Federal Court of Canada requiring eBay Canada to turn over the names, addresses, phone numbers and e-mail addresses of all high-volume power sellers. EBay power sellers who have not reported their online income should consider making a voluntary disclosure (tax amnesty) application before being approached by CRA.