The VPD or Voluntary Disclosure Program is provided by the Canada Revenue Agency. It is offered for taxpayers who feel there are errors or previous tax omissions. There are many people and corporations who have unintentionally made mistakes in their previous tax assessments. Once they realize the issue, they want to fix the problem and make their accounts accurate again.
The Voluntary Disclosure Program offers a chance for earlier tax mistakes to be amended. It provides relief from penalties and prosecution and partial interest.
There are two avenues to pursue. One type refers to disclosing income tax and source deductions. The other avenue focuses on the excise tax, HST, GST, air traveller's safety charge, the freight charged on softwood lumber products and excise duty.
It is necessary that taxpayers make all essential calculations to estimate any unreported earnings. They must show the correct information for the type of disclosure they're submitting.
Kochhar & Co. provides the expertise you need to help you determine which avenue is beneficial to pursue for your unique situation. We make sure all your pertinent information is included and are happy to answer any concerns or questions as they arise.
The income tax avenue underwent a new VPD program implementation on March 1, 2018. The program seeks just treatment for people and corporations who want to amend their previous tax issues. It is however not extended to those who chose to intentionally not comply with their tax matters. The CRA has two distinct categories, general and limited, which they distinguish cases by, and each has extremely different results.
Alternatively, the limited program features limits to the relief amount taxpayers may receive if the investigation shows they have intentionally avoided their tax responsibilities.
The general program offers relief on 50% of the interest and relief on penalties applying on monies owing. The CRA relies on certain factors to determine if it is the general or limited track that will categorize the business. Our Penticton accountants can use the CRA's conditions to establish eligibility.
If you meet the criteria for a valid application, you will be eligible for relief. The VDP can reinstate various benefits including RRSP carryforwards, Canada Child Benefits, HST/GST and items that were not accessible earlier due to failing to file accurately.
Here are the conditions that need to be met for eligibility:
- The VDP is complete
- The application is voluntary and not the result of a notified offense
- The application isn't an extension of the current filing year; it must include a tax return at least one year overdue
- The application must include a payment of the estimated amount owing
- The application showcases a penalty that would typically be added due to an error or omission
Anonymous Submissions
The VDP program enables individuals to anonymously send crucial information to the CRA. The silent disclosure is in place to allow the taxpayer to listen to the CRA's response outlining the consequences of staying with the program.
This nameless, voluntary disclosure is an important tool that any taxpayer has access to. However, please note that there is a ninety-day limit. Once the CRA is aware of a taxpayer's participation in tax non-compliance, the time restriction begins. The taxpayer’s involvement in the VDP will be stopped at this time.
While the VDP is an important resource, it is critical to talk about your tax problems with a professional tax accountant. It is vital you’re your omitted income will qualify for the VDP program. If there are tax treaties or additional provisions that can be utilized to establish a better outcome, these can be discussed. Kochhar & Co. can offer you the qualified advice you need.
Our devoted team wants to ensure you have completely and accurately completed the required conditions which are necessary for submitting an honest disclosure.
Our Penticton and Kelowna offices are happy to discuss the required steps you need to take for submitting a successful VDP. We can deliver estimates on taxes owing, back taxes, help you organize and complete unfiled tax returns, unreported income on the T1135 form, sales tax returns and unreported foreign assets.
We understand how unfinished tax obligations can be causing you to lose sleep and feel stress. Kochhar & Co. is here to help you get back on track. There is no need to put off your financial responsibilities any longer.
Call our Penticton office today to get started. We promise you will feel relief once you have us working on your behalf.