The Canadian Revenue Agency (CRA) in order to encourage taxpayers to disclose their uninformed, incorrectly informed or missing tax return information, avail the Voluntary Disclosure Program (VDP) and escape the probability of being prosecuted or penalized by the CRA in case they decide to audit your returns and find out the missing or incorrect information through CRA appointed auditors.

Through the VDP, any taxpayer can voluntarily disclose any income that as not present due to any reason in the filed tax return or confess any extra expense that may have been shown in the tax return. The reward CRA offers in return of VDP is waiving off the chances of being prosecuted in wake of tax evasion. This program basically promises a taxpayer that if it is applied conforming to the conditions CRA levies for it, CRA will not impose any civil penalties and also reduce interests that would otherwise be charged.

People who purely on voluntary basis disclose any error or mistake in the tax returns actually save themselves from criminal prosecution charges and civil penalties. The CRA will only be paying the original tax amount and any interest that levies however penalties of any kind will be waived off. In certain situations also where any uncontrollable circumstance may be in play, even interests on taxes can be waived off. CRA also offers the provisions of disclosing under the ?no name policy? where anonymous disclosure reveals the identity of the taxpayer.

VDP can also be applied for in cases where no initial tax return has been filed and no taxes have been paid whatsoever. CRA levies four conditions which render a taxpayer as being eligible for applying VDP. These conditions include

–          Making a disclosure that is purely voluntary and is not being done under pressure of an investigation that has either started or is in way

–          Making a disclosure that is accurate and no further incompleteness or errors remain

–          Making a disclosure only if some kind of penalty involving factor is present in the tax return procedure. Normal tax return will be filed normally.

–          The disclosed information resulting in VDP form should be older than a year and should not be used as an excuse to simply file late returns for the year and avoid penalty.

Although CRA Voluntary Disclosure Program looks like an easy way through tax problems that have built up for an individual however it should be remembered that hiring professional help from an expert even in this regard is essential. VDP as a form of tax amnesty is still subject to CRA audit. This means that after submitting the disclosure and related details CRA can still audit the given information and ill also question the individual regarding income and other related things. These things can be used against an individual if he or she defaults ever again.

VDP may provide tax amnesty for single time however the CRA takes extra precautions for these individuals in future and in case they plan to audit the individual sometime in future, they consider every detail very seriously. It is therefore suggested that hiring a tax expert from a reputed firm such as Tax SOS will ensure proper and accurate filing of tax returns so that VDP will not be needed and in case such a situation arises, tax experts can handle the job efficiently on your behalf.

Summary

VDP provides tax amnesty to tax defaulters and seeking help from tax experts provide help in dealing with CRA in a better manner.

A tax amnesty or a Tax pardon is also referred to as a voluntary disclosure in Canada. This is a procedure which enables you to deal with income tax or General Sales Tax returns which have not been filed. It involves income which has not been reported. When you appeal for a tax amnesty, you may be able to avoid penalties, charges for income tax evasion and prosecution too.

It is always advisable to seek a professional tax representative to help you. A tax firm has experience with tackling voluntary disclosures and ?representatives can guide you through your personal or corporate tax situation.

Revenue Canada has a voluntary disclosure program which is generally known as tax amnesty or a VDP, which enables taxpayers to declare their income voluntarily and file their tax returns, which have not been filed earlier or have been filed inaccurately.

The tax amnesty program helps in the waiver of civil penalties and it may save you from criminal prosecution. The crucial thing to remember is taxpayers have to act as on voluntary basis, being fully cognizant of their legal responsibilities as per the Income Tax Act and the Excise Tax Act by reporting their tax affairs before the CRA begins to take any action or investigates against them.

All taxpayers who take the shield of the tax amnesty program will have to pay their outstanding tax amounts as assessed by the CRA along with the interest charges on the unpaid amount with the penalties waived.

Canadian non-residents can also be accommodated for the tax amnesty program and if they are able to meet certain requirements, they can extend their date of submission under Section 216 returns. The program also enables anonymous disclosure under the provision of a No-Name Policy which has been created to protect the identity of the compliant taxpayers.

If the taxpayer decides to remain incognito and confidential, he or she will be allowed to proceed with the voluntary disclosure and cannot be prosecuted up to a period of ninety days. This period of ninety days starts from the effective date of disclosure. The effective date of disclosure is established by the date the written voluntary disclosure is submitted to the CRA, whereby a receipt is given on the VDP Taxpayer Agreement Form from the tax services office.

During this period, the taxpayer will be safe from any CRA interference or charges of prosecution. This anonymity is also applicable if the income which has not been reported has been earned from offshore sources or through ambiguous or criminal activity.

To summarize, tax amnesty is applicable when there has been a failure on a taxpayer?s part to report his or her income; or if the income has been reported inaccurately with some missing information. If apply successfully, the taxpayers can enjoy the benefits of penalties free or even reduced interests treatment on their taxes.

Individual and business taxpayers often do not file their tax returns on time or sometimes, they overstate their deductions or expenses to receive a higher refund. The tax amnesty program is the voluntary disclosure program which is designed to help these kind of taxpayers to volunteer and come forward to pay their arrears taxes with penalties which may be reduced.

There are things that you need to know about tax amnesty:

What kind of taxes qualify for the tax amnesty program in Canada?

All personal or corporate taxes that have been evaded in Canada qualify under the tax amnesty and the Voluntary Disclosure Program. They include income tax on income which has not been declared before and can even include income from even criminal activities. It will also include the general sales taxes and the HST on income which was not declared before or which was collected and not remitted.

What are the principal benefits of applying for?tax amnesty?

You may not be prosecuted. There may not be any penalties and interest may be reduced. Your case will be treated with confidentiality.

The?tax amnesty?program is to encourage people make the right decision to pay their back taxes and file their returns in arrears. In such cases, the taxpayers may be required to sign an agreement where they will have to agree to file and pay all taxes in the future, on time.

Do you need to report your back taxes through tax professionals who handle tax amnesty?

It is not mandatory but it is highly recommended. Acting on your own could lead you into tough situations with the CRA who may deny your application for tax amnesty and inflict penalties on you.

What are the penalties involved when you file late tax returns?

Filing tax returns after their due date could attract a late filing penalty of up to 17% of the taxes which are unpaid. The penalty amount can incur further interest. For those taxpayers who repeat their late filing in the succeeding years, the penalty increases to up to 50%.

Do non-Canadian residents qualify for tax amnesty program?

All residents who are non-Canadian but have a tax liability as a result of living in Canada previously or those who have Canadian source income may qualify for the tax amnesty program in Canada.

What happens in the case of not being able to produce all the records?

Absence of relevant records may not disqualify you from applying for tax amnesty and making a voluntary disclosure but you will have to establish your earnings to the best of your abilities.

What is the procedure for applying for tax amnesty?

An official written explanation has to be provided to make sure that confidentiality is maintained in the Voluntary Disclosure application with all relevant information of tax amounts which may not have been disclosed by you previously. If you seek professional help, there will be a representative who will be exclusively assigned to your case to maintain on your behalf the privileged ninety days to submit your information in detail or apply for extension period if required.

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An individual or a business organization cannot afford to think in terms of evading payment of taxes as it is deemed an illegal act. Some of the techniques of evasion include misrepresenting figures of earnings or profits and reporting a lesser amount. It also involves showing extra deductions which are disallowed by law when filing tax reports.?Tax evasion?would mean that a person who earns income does not want to report it to the Canada Revenue Agency (CRA). Businesses can also be charged as guilty of?tax evasion?if they intentionally report lesser amount of sales than made in actuality.

Another kind of?tax evasion?is on the sales taxes which are due to the government when any purchases are done which are outside of the jurisdiction of a particular business location. As per Section 239 of the Income Tax Act, the penalty for?tax evasion?could be at least fifty per cent of the total amount that has been evaded.

The Application of VDP or Tax Amnesty

Taxpayers are given?tax amnesty or VDP?by the Canada Revenue Agency when they are allowed to declare their income or amend any errors made in the previous filing of income tax. The government generally agrees to such corrections on the past returns and accepts a specified amount. There is a condition which waives off the penalties when the taxpayers disclose and claim?tax amnesty.

The CRA administers all cases of?tax amnesty?under the Voluntary Disclosure Program (VDP). An example can be given of a case where an individual has filed a tax return in the past and has failed to declare the accurate income. He or she has also declared more expenses than the actual entitlement. Such an individual can qualify for?tax amnesty?application under the?VDP.

Eligibility of VDP or Tax Amnesty

Certain conditions have to be met for a?VDP?application. The income that is being disclosed is pertaining to a declaration that is at least a year old and that declared income would have been subject to penalties. The disclosure is totally voluntary. It is advisable to go through these disclosures through a specialised?tax accountant.

It has to be taken into account that if the CRA contacts the defaulting taxpayer within a year prior to the disclosure, then the disclosure cannot be considered as voluntary. If the disclosure is not done on a complete basis to sort out all the discrepancies in the previous years, then the?tax amnesty?cannot be applied for.

A letter is sent to the CRA as the initial step in the?VDP?process, explaining the disclosure that is intended to be made for the type of tax return and also for the assessment periods in question. When the CRA accepts your application, it will acknowledge and assign a?VDP?number and assign a?VDP?officer to address your application request for?tax amnesty. The applicant will then have a period of ninety days to sort out all the corrections and amendments. At the end of that period, the CRA will issue the final confirmation that the?VDP?request has been approved for?tax amnesty.

Tax SOS, equiped with VDP knowledge and experiences, has helped many clients in achieving great results through VDP or Tax Amnesty program. Call us at 1-877-982-9767

Every individual or business that?s earning an income is liable to pay the government a share of its income in the form of tax. Tax evasion is a term used when parties deliberately fail to pay the taxes that are applicable on them. Under the laws of almost every jurisdiction in the world, evasion is termed as a felony because it hampers the ability of a government to fund its own operations. There are both civil and criminal penalties associated with this act and this is said to be very dangerous because even an innocent and honest mistake of the taxpayers can have serious consequences.

Solutions for tax offence – VDP or tax amnesty program

Taxation rules and codes aren?t easy to understand. What people need to know is that tax avoidance and evasion are two difference concepts. Avoidance is very much legal while the latter is not. In case of evasion, some of the consequences include payment of penalties, fines and interests. Apart from that, they may also face the possibility of imprisonment, which can ruin their business and career. However, one would be lucky to discover that in case they are coming up short on the taxes they owe or they are facing criminal charges because of failure to pay, they can take advantage of the tax amnesty program that exists in almost all countries.

What is VDP or tax amnesty program

Tax amnesty program is also called Voluntary Disclosure Program short for VDP. It is basically a strategy that?s employed by the government officials for generating revenue. With this program, people who have underpaid or evaded taxes can make their payments without having to deal with interest and penalties. All taxpayers can usually take advantage of this program, but it also has an expiry date and complete disclosure should be made before that. There are benefits associated with such programs for the government and also the taxpayers. One such tax amnesty program that?s offered in Canada is the VDP or Voluntary Disclosure Program administrated by Canada Revenue Agency or short for CRA.

The benefits of VDP or tax amnesty program

As the name indicates, taxpayers who have committed tax fraud and evasion can come forward voluntarily and cooperate with the CRA for avoiding criminal prosecution. With the help of the CRA VDP or tax amnesty program, individuals and businesses have the opportunity to settle their taxes without having to pay a lot of interest or penalties and avoid criminal charges altogether. As for the Canada Revenue Agencies, they can also collect their past-due taxes with this program and avoid having to go through the expense and complications that are associated with a criminal trial.

Such tax amnesty programs are immensely beneficial, but taxpayers have to keep in mind that they need to disclose all their taxes by the deadlines that have been established as per the program. The tax amnesty period might not be a very long one, but it offers a business an opportunity to avoid any astronomical late fees. Some times CRA can even reduce the interest in addition to waive off the entire late fees. In some cases, individuals and businesses may also have to pay penalties if they had been offered a tax amnesty program, but did not take advantage of it. It is a good way of getting out of charges for evasion.

VDP or Tax amnesty program is no doubt a complicated and time consuming process, knowing how to navigate through the system is the key to get the criminal prosecution and penalties waived. Working with VDP experienced tax professionals helps a great deal in reducing your stress and achieving satisfactory results. Call Tax SOS for a free consultation at 1-877-982-9767.