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Basically, what Voluntary Disclosure Program offers is another chance to correct your taxes. It accords you an opportunity to rectify that previously filed inaccurate return or to file a return you ought to have filed. When a filed VDP appeal gets approval from the CRA, you are required to clear the unsettled tax in addition to some interest paid partly or in full. However, you are likely to qualify for relief from penalties or prosecution.
It would be unfair to offer relief under the VDP to individuals or corporations who are just looking for a way to avoid taxes when a greater number of Canadians make sure to file and clear their entire taxes on time. To avoid a situation of favoritism, CRA differentiates applications for relief by taxpayers who want to rectify an involuntary error from those who are deliberately dodging their tax responsibility, and they make certain that these two kinds of people get very dissimilar reliefs.
When the CRA becomes aware of a taxpayer’s hidden engagement in a tax non-compliance, they continue restricting that person’s participation in the VDP. Note that the Canada Revenue Authority is a large body with the required expertise and resources, making it easy for them to get information about a taxpayer.
Applying for a VDP
There are two streams you can use to apply for the VDP to correct errors or exclusions in your income tax filings. However, you should know that this will rely upon the type of disclosure you want to make. One of the streams is the income levy stream which deals with all disclosures connected to the Income Tax Act. The other stream is the GST/HST stream which deals with all disclosures linked with harmonized sales tax, excise tax, goods and services tax, excise duty, air travelers safety charge and the softwood lumber products freight charge. Always ensure that you utilize the proper stream for your disclosure.
Requirements for an authentic VDP application
1. Ensure that the disclosure is voluntary. A disclosure ought not to include an offense that has been previously revealed by the representative of the applicant or the applicant themselves.
2. It should only be made in the recommended way and manner
3. It needs to be sufficient and complete with regards to all substantial aspects
What happens after you have made an application for VDP
1. It’s unnecessary to request your VDPs application’s reconfirmation. Provided that the eFiling system has admitted the application, then you should not worry because the application is on the VDP registry which means that the CRA is processing your application.
2. You will get contacted when your application is assigned to a VDP assessor for processing
3. If you change your mind, it’s possible to cancel the application.
4. Where you have other unresolved tax return issues linked to the VDP application, there are no restrictions to submitting them to the CRA via the usual channels as long as you do it before the application is handled.
Make sure to utilize a VDP so that you can regularize your tax duties for prevention of penalties and retribution.