In Canada, taxpayers are able to correct or amend their previous tax filings or inform the Canada Revenue Agency of any information that they had not previously provided in a past return. This allows a taxpayer that is not under audit to come forward of their own accord without fear of prosecution and reduce the likelihood of extra charges being applied to the taxes they owe to their government. This program, intended to promote tax compliance, is called the Voluntary Disclosure Program. This program is available to any individual who is behind on filing their tax returns, who have failed to declare all income on a past return, or who have filed a return and declared expenses that they were not entitled to. It is a very easy to understand program and all the forms needed are readily available online.
Correcting one's taxes in Canada is a relatively simple process. It must be submitted in writing, which is as easy as the taxpayer simply filling out a form known as the RC199, attaching documents supporting their submission to the form, and mailing or faxing it to the tax center that is responsible for their area. It is absolutely vital that the taxpayer includes all information that is related to their disclosure when making their submission. This will allow for their disclosure to go through with less trouble, with less chance of delay or refusal. There are a few conditions that must be met for a disclosure to be considered valid, and again, they are very simple to meet them all. The first, as the name would suggest, is that the disclosure be voluntary. You must start the process entirely of your own accord, before enforcement action is taken against you. The form must also be completed in full, not just picking and choosing errors but providing complete facts, and there should be a penalty or risk of penalty if the information is not given. There is no reason for you to give extra information if the government doesn’t require it! Lastly, the information should be a year or more overdue. Provided your disclosure is accepted as valid, you will not find yourself facing any extra charges. You are also able to submit a no name disclosure, after which you have 90 days to reveal your identity. A no name disclosure can help you because it will allow you to speak with a Voluntary Disclosure Program officer and get a better understanding of the implications of being rejected.
If your disclosure is denied, you will receive a notice of denial, which will state that your disclosure was rejected, that your information may be disclosed to another Canada Revenue Agency department, an assessment may occur, you may receive penalties, and an investigation and criminal charges may be started. You are able to send a letter to the Director of Tax Services Department and ask them to reconsider the decision to deny your Voluntary Disclosure. This is the time you would add any additional information that might have changed since the last time, but you cannot add new information that you left off your previous filing that was denied because it was incomplete, as your petition will simply be denied again. If you are able to proceed with your petition, only to have it rejected, then you may ask the federal court for a judicial review. You must petition the court within thirty days of the Director of Tax Services denying your request, and you must have form 301 completed and submitted with an additional fee. You should know that the court usually does not overturn the cases themselves, but will refer the case back to the Canada Revenue Agency if it is found to deserve another review.
Despite the apparent simplicity of this process, it is recommended that a taxpayer seek legal guidance of a tax lawyer to ensure their form is filled out completely, that the Voluntary Disclosure Program is the best choice for them. It will also help keep the taxpayer from submitting potentially incriminating evidence to the governmental authorities, and help ensure that the disclosure gets through and is not denied. Remember there are no “take-backs” once you have submitted a named Voluntary Disclosure Form, so if something is incorrect, the Canada Revenue Agency can apply charges or even criminal prosecution, which is exactly what you wanted to avoid! The government is not here to be your friend, and this program was designed purely to collect taxes for the government. So double check your form with a tax lawyer, make sure it’s complete and make sure it’s necessary. This program allows taxpayers to correct tax deficiencies, and while it is a simple process, one should always seek advice from a tax lawyer and ensure everything is in order before submitting their form.