The Canadian Tax Amnesty Offered by the CRA

Many Canadian taxpayers have come clean with their concealed offshore bank accounts to the CRA as part of the Canadian government’s tax amnesty programs. It has allowed the Canadian Treasury to collect many Canadian Dollars in unpaid taxes.

The voluntary disclosure programs or the tax amnesty programs are part of the comprehensive initiative to deter the taxpayers from tax evasion, particularly through their offshore accounts. This has also remained true about many people from Canada living abroad who will be required under law to file their tax returns, irrespective of where they are living or working. Tax evasion would bring on severe financial penalties.

There are four basic things to remember when using the tax amnesty program. The first important factor is to stay voluntary meaning that the CRA has never contacted you either by phone, mail or in person. The second important condition is to disclose the complete and full information; The third important thing to remember is that your case involves penalties in order for the CRA to excise their power to reduce your tax owing; The fourth important things are to have the tax problems involve more than one year old.

The tax amnesty and the disclosure programs have been created to encourage people to pay their back taxes. CRA may waive penalties for taxpayers in entirety if approved. A tax amnesty program will bring comprehensive relief with it. Generally, the window that is offered by the CRA does not give much opportunity to the defaulting taxpayers because their objective is to gather as much tax revenue as they possibly can in a short period assigned for the tax amnesty periods that last normally three months. If the taxpayers fail to take action during the tax amnesty periods, then there is a possibility of full penalties. Through these amnesty programs, you can file late tax returns or revise your returns to disclose additional income and incorrect deductions.

The voluntary disclosure programs motivate people to file their back taxes without the CRA needing to contact the taxpayers initially. If you happen to receive a letter from the CRA stating that you have not filed your returns, informing you that you owe taxes, then you cannot qualify for the voluntary disclosure program. You need to take steps before you receive any notification from the CRA.

Sometime people may get confused about the voluntary requirement especially with business owners. Tax Amnesty rules dictate that if CRA contacts you on one tax account that is related to your another tax account. Then you can not proceed with Tax Amnesty program on either account anymore as the voluntary requirement is no longer valid. For instance, if CRA contacts you to file your income tax returns. then you can not apply for Tax Amnesty Program for your unfiled GST returns anymore because GST and your business income account are related.