Are you feeling stressed that you haven’t filed tax returns for many years & have taxes owing, excluded foreign income or investment income, and haven’t reported foreign assets? If you owe taxes and haven’t filed a tax return, you would be charged late filing penalties and interest on the taxes owing. Also, if you haven’t reported foreign properties over $100K, penalties could be significant if not filed on time. These penalties can add up over time and can be quite stressful to have these issues linger and lose piece of mind.
There may be a solution. The CRA offers taxpayers the opportunity to come forward and update their tax filings through the Voluntary Disclosure Program. The program allows taxpayers that haven’t filed their taxes or have excluded items that should have been reported on their tax return to come clean and “make things right”, as the CRA would say.
The CRA may relieve the taxpayer from any penalties and potential prosecution on the information that would’ve been charged if their submission to the Voluntary Disclosure Program is accepted. The taxpayer can make a submission to the program to correct mistakes or incorrect information or disclose items that have not been reported or excluded.
To qualify, you must meet all the following conditions to have a valid disclosure:
1) the disclosure must be voluntary (i.e. the CRA should not have taken action or sent a notice to you)
2) a penalty applies to it
3) the information is at least one year overdue
4) the information is complete
So how should one proceed with filing a valid voluntary disclosure? To start, form RC199, Voluntary Disclosures Program (VDP) Taxpayer Agreement will need to be prepared and signed or including a letter that will have the details indicated on the form. Also the necessary forms that relate to your situation would need to be prepared alongside the form and letter.