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CHANGES TO THE VOLUNTARY DISCLOSURE PROGRAM COMING. TIME IS NOW TO FILE.

July 1, 2017
by Fraser Simpson

CHANGES TO THE VOLUNTARY DISCLOSURE PROGRAM COMING. TIME IS NOW TO FILE.

If you have not filed your taxes in a couple of years (or more) or ever omitted some income from your tax return, you may be interested in proposed changes announced last week to the Canada Revenue Agency’s Voluntary Disclosure Program (VDP). The VDP allows taxpayers to voluntarily come forward and file previous tax returns or correct previous tax filing errors without penalty or fear of prosecution. The tax would still be owing with interest; however, penalties and interest would be waived.

The proposed changes to the VDP were introduced back in October 2016, when the House of Commons Standing Committee on Finance, recommended that the CRA undertake a comprehensive review of the VDP. In December 2016, the committee concluded that the VDP could be made “more effective and fairer.” Proposals included a framework for tightening the criteria to be accepted into the program.

The CRA is expected to announce formal changes to the VDP in the fall of 2017. Any changes would be effective Jan. 1, 2018.

What does this mean for you?

Well, if you are considering filing overdue taxes you should do it NOW.

Here’s why;

  • The existing rules essentially make it easy to qualify for a penalty waiver and associated interest.
  • As the new rules are formed in the fall, the CRA may stall applications till the new year when the new rules come into force.
  • The new rules will make it harder to qualify.
  • The summer is the best time to file overdue taxes as the CRA reports to the government in October  and they want to show good numbers; i.e. collected tax from overdue returns.

Changes include: requiring the payment of the estimated taxes owing as a condition of qualifying for the program. Currently, you do not have to pay anything, just report and make a payment arrangement.

Whether it is a tax return audit, a tax lien, income garnishment, bank accounts frozen, CRA personal or corporate penalties and interest, payroll tax issues, late in filing….whatever it is contact us, email David Harris at david@taxmechanic.ca or give us a call. We offer a free 30 minute consultation to help assess your current situation and develop a successful strategy.

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Mr. Simpson has been active in income tax consulting, residential and commercial real estate development since 1985. Prior to founding the Tax Mechanic, he held several senior management positions, including Director of Land development for a real estate investment company (John DiPoce Management) and Controller of Communicorp Multi Media Inc., a TSX listed company. Mr. Simpson obtained his Bachelor of Arts degree from York University, Toronto, and qualified as a Chartered Accountant in 1993. He has also completed the Canadian Securities and Partners, Directors and Senior Officers courses.

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