Making a voluntary disclosure is the best way to protect yourself, particularly if you are unsure you have filed the right information to CRA. Being proactive demonstrates that you have made an effort to openly share your information with CRA.
Canadian residents are required to report worldwide income and there is a window of opportunity to make a disclose. If at any point during the tax year you have held a “specified foreign property” in excess of $100,000, you are required to submit a special information return. Failing to report such income or file can result in you being subject to significant penalties and possibly even criminal prosecution. Moreover, interest accrues daily on these penalties.
Not sure if you’ve made a correct disclosure? If you have questions, please get in touch with us.
Minister of National Defence confirms CRA investigation of Panama Papers
Have you correctly reported your earnings and filed all required information returns? The CRA will be taking action against those who fail to report earnings. Taxpayers who have not correctly reported their earnings, or who are unsure if they have disclosed all required information, should consult with an independent tax advisor. It is a good idea for any Canadian resident who has an offshore account, even those not listed in the Panama Papers, to consider making a voluntary disclosure in a voluntary manner.
Did you know the CRA can assess your taxes at any point?
In many instances there is no limitation period with respect to errors and omissions relating to offshore accounts.
The CRA’s Voluntary Disclosure Program (VDP) was designed to help taxpayers avoid penalties and potential prosecution by offering them a chance to disclose offshore or other income. However, in order to take advantage of this relief, you MUST be pro-active in filing your disclosure. In other words, the CRA must not uncover the non-compliance themselves through investigation or enforcement action.
Did you know that the following recent VDP developments have increased the chances of CRA detecting non-compliance?
Some of these developments include:
- An increase of funding to combat tax evasion and avoidance
- The Offshore Tax Informant Program (OTIP) launched in 2014
- More stringent reporting requirements for electronic transfer of funds
- Increased tax information sharing between foreign countries
What are the conditions for a valid disclosure?
Your disclosure must be voluntary and complete, and relate to an offence that has a penalty. Moreover, your disclosure must pertain to information that is at least one year overdue. Importantly, disclosures you make under the VDP are subject to a limited time frame. Disclosures must be made in a timely manner.
How can I participate in the VDP?
Under the VDP, you can make your disclosure on either a “named” or “no-name” basis.
In a no-name process, a taxpayer representative can have preliminary discussions with the CRA without identifying you, the taxpayer. This option offers peace of mind if you think you have incomplete information, or are not certain that a named disclosure will meet the validity requirements. Protection offered by the VDP is effective from the date of disclosure, provided all necessary documentation is provided to the CRA within 90 days.
Contact us to learn more about the benefits of the Voluntary Disclosure Program and whether it’s the right fit for you
Source: TAXTimes 2016 Issue No. 10 – May 27, 2016. Thomson Reuters Canada Limited
This article deals with a number of complex issues in a concise manner; it is recommended that accounting, legal or other appropriate professional advice should be sought before acting upon any of the information contained therein.
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