The CRA gives you a second chance!
This is what life is about.
We do not get redos, but we do get second chances
-Jeffrey Fry, author of “Distilled Thoughts”
To err is human, isn't it? We've all made mistakes before and we'll continue to make some. Sometimes we pay a hefty price for them while, at other times, we manage, often for reasons beyond our control, to limit the consequences. What would you say if I told you that this could be the case with the Canada Revenue Agency (CRA)?
Many of you wouldn't believe me, but it's true. And in this case, what Jeffrey Fry wisely said above, takes the form of the voluntary disclosure program. Let me tell you a little more about it.
Every year, many of us anticipate - with varying degrees of anxiety - that fateful moment when we must prepare and send our tax return to the CRA. The more daring will venture to buy one of the many tax software packages and complete their tax return themselves. The others - or should we call them the wise ones - will ask a professional - an accountant, a tax specialist - to take care of this for us. But it doesn't matter. An error, an oversight, even an omission, can creep into our tax return. And, depending on the nature of the error, we may have to pay a heavy price for it.
Fortunately, the CRA's voluntary disclosure program is there for those who want to correct errors that have made their way into their returns. By submitting a request to the CRA to correct an error that was previously made, the CRA can, depending on the situation, forego any penalties that would otherwise have applied and limit the amount of interest that you would pay. And in all cases, you will not be subject to any criminal prosecution in connection with the information you disclose.
Quite the surprise, isn’t it!
There are many situations that can fall under this program. Here are just a few examples:
- You may have failed to file a tax return for a previous year and it is now overdue.
- You may have omitted to declare some of your income.
- You may not have remitted source deductions for your employees (for example, Canada Pension Plan or Employment Insurance deductions).
- You may have failed to charge, collect or declare GST/HST.
- You could have provided incomplete information on a return.
Of course, the program can apply to a variety of situations, but these examples give you an idea of what the program is all about.
Since there is nothing free in life, there are conditions to be met before the CRA can accept your application under the voluntary disclosure program. There are five of them:
- You must submit a request voluntarily and before any enforcement action is taken by the CRA against you or a person related to you.
- You must include all relevant information and documents (including all returns, forms and schedules required to correct the error or omission).
- The information submitted must be subject, or potentially subject, to a penalty.
- The information submitted must be at least one year or one reporting period overdue.
- You must include payment of the estimated tax liability or apply for a payment arrangement (subject to CRA approval).
If you meet these conditions and the CRA approves your application, you're almost there! You now have peace of mind knowing that, whatever tax issue you were dealing with, it will soon be resolved. And most importantly, that your mistakes won't haunt you in the future.
For more information, don't hesitate to contact myself at Sicotte Guilbault. Not only can I help you with an application to the voluntary disclosure program, but I can help you minimize your tax obligations, and I can represent you before the CRA and the Tax Court of Canada. I look forward hearing from you!
