The CRA gives you a second chance to correct your taxes through a Voluntary Disclosure Program. As a policy matter, the CRA warns all those individuals who've unreported incomes from the previously filed tax returns, to disclose their earnings to the CRA right away. If you approach CRA for the correction before they come to you, there will be a relief from criminal prosecution and penalties. We have seen people scared of their tax situations. Chartered Professional Accountants and Tax Lawyers can confront such problems prudently and guide people to make the best tax decisions.
Remember, when there's an income source you have unreported on your tax return, you should report it immediately. Otherwise, the CRA has penalties set up, and in the event, you repeatedly don't report your earnings, the penalties could be even more severe. If you don’t report your earnings or under-report your income in your tax filings, it is considered to be a form of tax evasion, which is a serious crime. This can result in huge fines making re-payment very difficult.
Voluntary Disclosure Program (VDP) is a CRA's administrative program that promotes compliance with Canada's tax laws. This program encourages taxpayers to come forward voluntarily and correct all previous errors and omissions in their tax affairs. VDP application can be submitted in 02 different streams, i.e. 1) Income tax stream and 2) GST/HST stream.
Following are the income tax and GST/HST Disclosures that can made on a case to case basis:
Income Tax Disclosures
- Expenses claimed not eligible
- Failure to remit source deductions
- Failure to file information returns, i.e. T4/T5
- Underreporting of income
GST/HST Disclosures
- Undisclosed tax liabilities
- Improperly claimed ITCs
- Refunds or rebates
- Unpaid tax or net tax from the previous reporting period to CRA
- Disclosures may also relate to Incomplete info on a return & failure to file an information return, i.e. T4/T5
The CRA allows 90 days to provide information and documents for the above disclosures so that the VDP request is not denied. It is recommended that you submit your VDP application through a professional accountant who is experienced in handling such difficult situations. The VDP provides taxpayers with an opportunity to reduce or eliminate penalties and interest which might otherwise be assessed by the CRA and avoid prosecution in respect of under-reported or unreported income and other tax errors and omissions. Effective use of this program will save you more and you can live a respectable life; otherwise, unreported income can destroy you. The choice is yours!
If you would like some help from a Tax Accountant in Toronto, Contact GTA Accounting, and we will help you get your tax filings up to date.