By Grant Gilmour
What to do if you realized you made an incomplete or inaccurate filing with Canada Revenue Agency?
Tax filings can be complicated and occasionally you may miss a filing or make an incomplete or inaccurate filing. The Voluntary Disclosure Program (VDP) is administered by Canada Revenue Agency (CRA) to encourage taxpayers to comply with Canada’s tax laws without incurring penalties for missed, incomplete and inaccurate filings.
By making a valid disclosure under the VDP, you would pay only the taxes and interest owed and you may avoid any penalties or potential prosecution on the information disclosed.
There are many types of information that you can disclose to CRA such as:
- Unreported personal or business income
- Unreported source deductions
- Late filed income tax returns
- Late filed information returns
- Expenses you were not entitled to claim
To be accepted as a valid disclosure under the VDP, your submission must meet all of the following four conditions:
- The disclosure must be voluntary (you must make the disclosure before CRA noticed and commenced action against you with respect to the information you are disclosing);
- The information disclosed may involve a penalty;
- The disclosure must include information that is generally more than one year overdue;
- The disclosure must be complete. It must include all appropriate information to support the disclosure.
You cannot make a disclosure more than once on the same issue. For example, if you have missed a T1135 Foreign Income Verification Statement in a previous year and made a valid disclosure for this missed filing under the VDP, you cannot use the VDP at a later date to file another missed or incomplete T1135. Therefore, you want to use this program carefully and ensure that you disclose all incomplete or late filings on the same issue as one submission under the VDP and then be very diligent and thorough with your filings around this issue in subsequent years.
If you are considering filing under the Voluntary Disclosure Program, then contact Gilmour Knotts Chartered Accountants for assistance.