CRA Voluntary Disclosure Helps to Waive Penalties

In case of unreported income or late filing taxes that relates old tax years problem. Taxpayers have the option to file voluntary disclosure, CRA could grant a complete waive of interests and sometimes a partial relief of interest.

If taxpayer files an anonymous voluntary disclosure, the taxpayer has a period of ninety days from the date the taxpayer agreement form or the initial voluntary disclosure letter sent to the CRA to have his or her identity disclosed. This ninety day limit to disclose the identity of the taxpayer in an anonymous voluntary disclosure cannot get an extension. In the case of an anonymous disclosure, the repayment terms are not binding on the CRA. Generally, CRA will uphold the terms which are provided before the disclosure of the identity of the taxpayer. But, if it is verified that the disclosure did not report all relevant circumstances, the terms will stand nullified and the taxpayer will be open to penalties and prosecution.

The taxpayer cannot use the voluntary disclosure program twice. For this purpose, all inaccurate details have to be disclosed at the very beginning of the report to take a full benefit of the program. The taxpayer is expected to comply with the standard set by the CRA concerning the voluntary disclosure. The CRA also expects that when the taxpayer provides a clean disclosure, he or she will be compliant in all future returns.

It has to be remembered that despite the voluntary disclosure, an investigation can be opened up by the CRA into any aspects or periods of the accounts of the concerned taxpayer. For example, if the taxpayer is disclosing for the 2009 taxation year alone, CRA could open up an investigation into the 2007 year if it has not been filed. It is also possible in the case of a taxpayer not remitting the GST remittances for some periods. The CRA could also investigate the payroll deduction remittances.

The taxpayer has a limited amount of time to submit all the documentation and verify once the process of the voluntary disclosure has started. It means that the taxpayer has to review his or her files and be thoroughly prepared for a possible demand for additional documents. In certain cases, a taxpayer can also consider other programs available like the Application for Taxpayer Relief or the GST Penalty Relief. Whatever the case may be, it is better for the taxpayer to take the help of tax specialists to decide on which method will be best before the voluntary disclosure.