Under the Canada Revenue Agency’s Voluntary Disclosures Program, taxpayers can come forward to disclose past non-compliance, whether that be non-filing, over-claimed expenses, offshore reporting, or any of an almost limitless number of errors and omissions on Canadian taxes. We help Canadians voluntarily disclose issues like this on a daily basis, and it forms a large part of our practice.
Recent Changes to the Voluntary Disclosures Program
Recently, the CRA has made some substantial changes to the program. Included among these changes are fundamental changes to the procedures for making the disclosure, as well as changes to eligibility criteria. However, two changes in particular make it more important than ever to seek legal representation before making a disclosure: “Payment up front” & the Limited Disclosures Program.
Payment Up Front
CRA now expects taxpayers to make a payment of the estimated taxes owing when they make a disclosure. Previously, our clients could just disclose first and sort out the tax payment later; now, they have send money with their application (although we are happy to discuss methods for easing this burden).
Alternatively, Canadians making disclosures can claim that they do not have the funds to pay now, but request that the CRA’s collections division contact them to arrange a payment plan. We highly recommend seeking legal advice from Canadian tax lawyers with experience handling both collections and disclosures.
First, we know the ins and outs of the collections process, and have a firm understanding of their protocols and tactics. We know what they like and dislike, and how best to coordinate workable payment plans.
Second, we know what financials the CRA will request from you, and we can help you put them together and communicate any mitigating circumstances. While the process is fundamentally about full disclosure, you will be required to pass along a wide range of information to collectors. What this means is that your discussions with tax lawyers, which are subject to solicitor-client privilege, are now more important then ever. This protects you from attempts to force you to divulge your strategy or information.
Lastly, having people negotiate on your behalf puts someone between you and the collector. Dealing with CRA’s collectors is extremely stressful, and people can grow understandably emotional when handling these disputes themselves. But often, animus between taxpayers and their collectors can prevent reasonable solutions.
If you and the collector do not come to an agreement, CRA could yank the protections of the disclosure program right out from under you. Not coming to an agreement is even more risky in the disclosure context.
In short, having tax lawyers on your side protects you throughout the process, and if you don’t have the funds to pay immediately, trying to cut costs by going it alone can open you up to a stressful and risky dispute with CRA’s collections arm. Have additional questions or want to discuss the Voluntary Disclosures Program? Contact us today!
This article provides information of a general nature only. It does not provide legal advice nor can it or should it be relied upon. All tax situations are specific to their facts and will differ from the situations in the articles. If you have specific legal questions you should consult a lawyer.