Canada: Voluntary Disclosure CRA Latest Statistics – Toronto Tax Lawyer Commentary
Voluntary Disclosure & CRA Annual Report to Parliament – General Information
CRA has provided the latest statistics about the tax amnesty or voluntary disclosure program (VDP) for the previous fiscal year. CRA provides an annual report to parliament that provides a wealth of information about its activities over the past year. The 2014-2015 CRA Annual Report to Parliament was released in late January 2016 and is tabled in Parliament annually by the Minister of National Revenue, under the legal requirements of the Canada Revenue Agency Act. The report contains comprehensive information on the performance of the CRA. It is clear from this report that the Canadian voluntary disclosure program is being utilized more by Toronto tax lawyers and Canadian taxpayers.
Voluntary Disclosure – Toronto Tax Lawyer General Summary
The Voluntary Disclosures Program (VDP) or tax amnesty program gives Canadian individual taxpayers and corporations with an opportunity to correct inaccurate or incomplete information, or to disclose information not previously reported without the risk of prosecution and with no penalties and a possible reduction in interest. Included are Canadian taxpayers who have not have met their income tax obligations because they had unreported income including offshore or internet based income such as Uber, ebay sales or airbnb rentals, or they claimed expenses they were not entitled to, failed to collect or remit payroll source deductions or GST/HST, or did not file an information return such as a T1135 or T1134 for offshore assets. Canadian taxpayers who make a valid income tax voluntary disclosure will have to pay the taxes or charges owing plus interest, but are not subject to civil penalties or prosecution.
Voluntary Disclosure – Statistics for 2014-2015
CRA reports that the total unreported income from all voluntary disclosures was over $1.3 billion. This represents an increase of 65% over the amount reported in the 2013‐2014 fiscal year annual report to parliament. The growing importance of offshore tax enforcement efforts is evidenced by the amount of unreported income from offshore voluntary disclosures of $780 million, an increase of 157% from 2013‐2014. The number of disclosures and the amount of undeclared disclosures, in part due to continued international efforts to share tax data, made up most of the increase.
Finally, the tax department states that there were 19,134 voluntary disclosures received in fiscal year 2014‐2015, an increase of 21% over the prior year.
Voluntary Disclosure – Timing for Disclosure
In order to qualify for a Canadian voluntary disclosure the Canadian taxpayer must approach CRA and initiate the voluntary disclosure, either as a no-names voluntary disclosure or with identify fully disclosed, before any contact from CRA. If CRA has initiated an audit or investigation, or even sent an enquiry letter, it will generally be too late to qualify for the VDP tax amnesty with respect to the subject matter of the enquiry. If you have undisclosed income tax issues contact one of our Toronto income tax lawyers for a consultation before CRA contacts you.
