Voluntary Disclosures Program: What Canadians Need To Know
By TOI Staff November 5, 2023 Update on : November 5, 2023
Working adults must pay taxes if they value the public goods, products, and services their taxes finance. In Canada, however, 10 to 12 percent of citizens do not pay taxes. Non-filers lost roughly 1.7 billion worth of cash benefits in 2015.
By paying your taxes, you can receive various government-mandated benefits. The Canada Revenue Agency (CRA) introduced the Voluntary Disclosures Program to encourage citizens to resolve business and personal tax issues. Check out what you need to know about this program and how it can help you come tax time.
Through the Voluntary Disclosures Program (VDP), CRA grants relief to Canadians who voluntarily come forward to address and fix omissions or errors in their tax filings. This way, individuals can avoid costly tax penalties before CRA becomes aware of or contacts them about it.
After coming forward, you must pay the correct amount of tax you owe and the interest that results from your corrections. In some cases, the agency can protect you from prosecution and exempt you from the penalty and partial interest you would have had to pay.
However, remember that the program does not encourage Canadians to be negligent with their taxes. The CRA does not aim to reward individuals or corporations looking for creative ways to avoid paying their taxes. The agency grants a higher level of relief to people fixing an unintentional error than those who intentionally avoided paying the tax they owe.
If you are concerned about a potential error in your tax return, you can apply under the VDP. If you find yourself in one of the following situations, you may want to take advantage of the program:
- You did not file a return for the previous year, and now you are late for filing
- You claimed ineligible expenses on a tax return
- You did not submit employee source deductions, including employment insurance and pension plan deductions
- You did not report income from foreign sources taxable in Canada
Remember that the CRA only grants relief to individuals who follow the following regulations:
- Submit your application before the agency takes any action against you
- Your application must include all crucial information, including the taxation years affected
- Involve the potential application of a penalty
- Pay the tax you owe, including any interest
If you are ineligible to apply for VDP, you have other options for relief in the CRA, such as the Taxpayer Relief Program (TRP). Under the program, you may qualify for relief from interest and penalties if you cannot pay your taxes due to the following reasons:
- Errors or delays from the side of the CRA
- Financial hardship
- Extraordinary circumstances
- Inability to pay
- Other specific circumstances beyond your control
Tax season can be stressful for people, especially those who are unprepared. This section outlines simple tips to help you pay your taxes on time and avoid penalties.
- Understand your tax obligations
- Keep complete and accurate financial records
- File taxes on time and in full
- Keep receipts when you donate
- Know the tax deductions that apply to your life situation
- Hire expert tax accountants who can file your tax returns for you
In Canada, several tax firms offer high-quality tax services for individuals and corporations. For example, Faris CPA is a Toronto-based accounting firm offering the services of experienced tax accountants. The company’s tax specialists are experts in resolving business and personal tax issues with the CRA.