Kelowna: 778-478-0344 Penticton: 778-476-2600

Voluntary Disclosure Program

The Voluntary Disclosure Program (VDP) is offered by Canada Revenue Agency. It is for taxpayers who think there are previous tax omissions or errors. There are numerous corporations and individuals who have accidentally made mistakes on their previous tax findings. They wish to rectify these issues and get their accounts up to date. The VDP is an opportunity to fix previous tax mistakes and offers relief from prosecution, penalties, and partial interest.

There are 2 streams: One stream focuses on disclosing source deductions and income tax. The other stream focuses on GST, HST, excise duty, excise tax, the freight charged on softwood lumber products and air traveller’s safety charge.  Taxpayers need to take all reasonable calculations to estimate unreported earnings. They have to show the pertinent information for the kind of disclosure they are submitting.

Our experienced tax accountants at Kochhar & Co. can help you navigate which stream is suitable for your situation. We ensure that all of the vital information is included and are always available to answer any questions you may have.  

On March 1st, 2018, a fresh VDP program was implemented for the income tax stream. This program calls for just treatment of corporations and people who wish to correct their previous tax errors. However, it is not extended to individuals who deliberately chose not to comply with their tax responsibilities. The CRA distinguishes two separate categories (limited and general), resulting in very different outcomes.

The limited program limits the relief level taxpayers are eligible to receive if they are found to be avoiding their tax obligations intentionally. The general program, on the other hand, provides relief on fifty percent of the relief and interest on penalties applying on amounts owing. There are specific factors used to decide which track (limited or general) the business will be categorized under. Based on the CRA’s conditions, our Kelowna accounting firm can determine eligibility.

You will be eligible for relief if you meet the requirements for a valid application. The VDP can reinstate benefits including the GST/HST credits, RRSP carry-forwards, and Canada Child Benefits that were not available previously from failing to file.  

The conditions to meet include:

• The application is not the result of a notified offence and is voluntary.

• The VDP is finished.

• The application needs to include a payment of the estimated amount owing.

• The application involves a penalty that would be usually imposed because of an omission or error.

• The application is not an extension of the current filing year. Therefore, it needs to include a tax return at least one year past due.

The VDP program allows people to send in vital information to the CRA anonymously. This silent disclosure enables the taxpayer to listen to the CRA’s response indicating the repercussions of continuing with the program.

This voluntary, name-free disclosure is an essential tool that taxpayers can access. Note that there is a 90-day limitation. This time restriction comes into play once the CRA is aware of a taxpayer’s involvement in tax non-compliance. In this event, the taxpayer’s participation in the VDP will be stopped.

Even though the VDP is a resource, it is essential to discuss your tax issues with a tax accountant. It is important that your omitted income will qualify for the disclosure program. If there are other provisions or tax treaties that can be used to create a more desirable outcome can be discussed. 

We are committed to making sure you have accurately and completely adhered to the conditions that are required for submitting an authentic disclosure. Our Kelowna and Penticton offices can share the steps you need to submit a successful VDP. We can help you organize unfiled income tax returns, estimates on taxes owing, unfiled HST, back-taxes, sales tax returns, unreported foreign assets and unreported income on the T1135 form. Let our professional team answer your questions and concerns.