Demystifying the CRA Voluntary Disclosure Program

If you’re one of the thousands of Canadian “taxpayers” that have failed to file Canadian income tax returns you can be comforted by the fact that the Canada Revenue Agency (CRA) administers a program to help Canadians voluntary file past due income tax returns without threat of penalty.

This program can be of great benefit to delinquent taxpayers as potential penalties on overdue income taxes can be significant and in many cases exceed the amount of taxes owing.

In order to qualify for CRA’s voluntary disclosure program a taxpayer must meet the following criteria:

1. Voluntary - The application for tax amnesty must be voluntary. If the taxpayer has been contacted by CRA with respect to the tax years in question or the taxpayer was aware of a tax audit that was eminent, the disclosure will be rejected.
2. Complete - The disclosure must be complete and include all relevant information, facts and details.
3. Penalty - The disclosure must involve a penalty such as a filing penalty, instalment penalty, etc.
4. One Year Past Due – The filing(s) in question must be over one year past due unless the disclosure is to correct a previously filed tax return.

Once these criteria are met the taxpayer is eligible to complete form RC199 and submit the new tax information for review and assessment. Once completed this form should be mailed to the Assistant Director – Enforcement Division of the taxpayer’s closest Tax Service Office.

If more time is needed to prepare the returns the disclosure can be submitted and the tax information can follow shortly thereafter once the CRA has approved the voluntary disclosure form.

CRA has developed a negative reputation in the eyes of many Canadians, however is most cases the CRA is reasonable and fair when dealing with delinquent tax filers provided the submission of late tax returns is voluntary. Maintaining an open and honest dialogue with the voluntary disclosure officer can ensure the process is relatively painless and expeditious.

Phil Hogan is a Chartered Accountant specializing in Canadian and US Income taxes. Phil assists his clients with tax preparation, tax planning, CRA disputes and corporation income taxes. Phil can be reached by email at phil@philhogan.com, on his website at www.philhogan.com or by phone at 250-661-9417.

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