The process of filing income taxes can be long and arduous, so it’s not surprising many taxpayers come to the realization that they’ve misfiled or unintentionally left out important information, or have fallen behind on their tax return filings. Mistakes can happen — but there’s no reason why you should have to pay long-term consequences such as penalties or prosecution for tax evasion.
Mistakes and omissions shouldn’t loom over your head, there are solutions at your fingertips that you may be able to take advantage of. Many taxpayers are taking advantage of their Voluntary Disclosure Program — an opportunity to fix past mistakes and get their financial reputation back on track.
So what exactly is voluntary disclosure, and can it apply to your situation? In this blog, we’ll aim to answer those questions and help you understand how a licensed tax lawyer can help you prepare for the next steps.
What is the Voluntary Disclosure Program?
The Voluntary Disclosure Program is the process of submitting an application pertaining to the mistakes or omissions originally submitted by the taxpayer to their federal government’s revenue branch. This application is meant to give taxpayers a chance to come clean about any discrepancies with their original income tax filings, with the goal of foregoing any penalties or interest payments.
Am I Eligible for the VDP?
The Voluntary Disclosure Program is designed to reward taxpayers who are fully cooperating with the Canadian Revenue Agency and often poses the question — am I eligible for the program?
The general answer is yes. According to the experts at CanadianTaxAmnesty.ca, most taxpayers who have left out information on their taxes are eligible to participate in the program. In other cases, the program can pertain to those who claimed ineligible expenses, failed to report international income or did not file a previous return.
Are Their Special Program Conditions?
Qualifying for the VDP is often a simple and streamlined process, but there are specific conditions that must be met in order to qualify for the program.
- You must submit your information voluntarily. This means processing your application before the CRA takes action against you for mistaken or omitted information.
- The application must be completed in its entirety. Taxpayers are responsible for submitting all required information and details that pertain to all affected tax years.
- Any payments of your estimated owed taxes must be included in your submission.
By meeting these conditions and working with your tax lawyer, you can ensure you have all of the details you need to effectively submit your application for Canada’s Voluntary Disclosure Program.
Do I Need a Professional Tax Lawyer?
When it comes to dealing with the CRA, an experienced tax lawyer can help. With various forms to fill out and submit, either physically or electronically, the entire process can feel overwhelming. A tax lawyer specializes in all things tax law — including helping their clients understand the nuances of the VDP. In the event that the voluntary disclosure application is denied, your Canadian tax lawyer can apply to court or if the CRA to accept your application.
With their insight and expertise, you can feel confident you’re submitting the correct information to the CRA and can safely avoid any interest payments or penalties as a result.
