Alternatively called Tax Amnesty or Tax pardon, the Voluntary Disclosures Program (VDP) belongs to the Canada Revenue Agency. The CRA uses the VDP Canada program to collect pending taxes from the taxpayers in a respectable manner. Taxpayers are requested to step forward and correct their tax information and disclose new information they had previously withheld.
Those who agree to use the VDP Canada program do not incur income tax evasion penalties, charges or lawsuits. They simply pay their outstanding tax balances and interests. In order to use the VDP Canada program you must fulfill four conditions:
- Your disclosure must entail data that is no less than one year past the deadline for filing your returns. If your data is less than one year past the due date, you should not initiate a Voluntary Disclosures Program simply to avoid the late tax filing penalties and interest charges.
- The disclosure must entail a penalty
- The CRA must ascertain that your disclosure is complete
- The CRA must ascertain that your disclosure is voluntary.
It is good to note this term: the effective date of disclosure. It refers to the date that the Canada Revenue Agency got your VDP Canada application submission. This date is already stamped on the envelope when the CRA receives it in its mail room. Benefits you expect to receive from the program will be activated on the effective date of disclosure. Then you will receive an acknowledgement letter within fourteen days of receipt of your VDP Canada submission.
There are people who receive another letter requesting them to submit more information to the CRA. If they do not send it in ninety days their disclosure is denied. When the CRA’s decision concerning your disclosure is positive they will show acceptance in writing. Depending on the nature of your VDP Canada application you may need a senior tax consultant.
If the reason they gave for rejecting your VDP Canada submission was the fact that you submitted inadequate information there is no way that a second review will be granted. A VDP program can be completed anonymously. The so called no-name disclosure method entails an initial submission that does not identify you directly. But for it to work you should illustrate how you fulfill the selection criteria we mentioned above.
Although your accountant is available, we would suggest you work with a third party tax consultant who has no knowledge of your tax returns history. A personal accountant knows everything about your tax issues and the CRA might preclude them from acting further in the case of no-name disclosure. An tax consultant should be used to create tax filings for voluntary disclosures as you will not have wasted your time if a settlement with the Canada Revenue Agency cannot be reached.
Besides, a trustworthy third-party firm can represent you throughout the VDP Canada submission process. For instance, if you believe that the decision on your voluntary disclosures was unfair or unreasonable; your third party representative can appeal on your behalf. They can write to the Director of the CRA tax centre that reviewed your VDP first, requesting them for a second review of your file.