What is VDP and How Can It Be Used to Your Benefit
Posted by support2 March 01 2014
Tagged Under : benefits of VDP, correct tax affairs voluntarily, Voluntary Disclosure Program
VDP or Voluntary Disclosure Program is basically a chance that the CRA offers all its taxpayers to come in compliance with the tax laws of Canada. VDP is basically a program that allows the taxpayers of Canada to correct tax affairs voluntarily. Under VDP individuals can file disclosure relating to tax affairs that were either wrongly filed before or were incomplete or omitted something that should have been in the filing too. In short this disclosure can include all information pertaining to previously reported incomplete, incorrect or missing information to the CRA. Any kind of tax evasion that may have occurred consciously or unconsciously can be reported in VDP.
This disclosure can be made by any taxpayer in Canada may it be an individual, a business, employer, resident, etc. The disclosure can be submitted personally or a professional tax expert representative can also perform the job for you.
VDP is a chance to escape penalties (that occur due to tax evasion) that one would otherwise have to pay in case the CRA finds any incorrect, missing, or incomplete tax filing. This voluntary disclosure allows individuals to pay only the taxes plus interest and the penalty can be escaped through this path. Also the potential risk of being prosecuted is waived off.
A disclosure is valid only when
1? It is submitted purely voluntarily, that is the act is not done after any initiative of compliance action taken by CRA related to the information disclosed.
2? It can include information that is older than a year or overdue for longer
3? It could include a penalty
4? It should have complete information that supports the disclosure submission. In case full information is not provided initially with the disclosure, chances of disclosure being denied are present.
There are however other requirement of VDP as well. Once the VDP is submitted, granted and settled, CRA expects the individual to pay his owing amount instantly and the interest amount accrues all the same. Failure to pay will result in a collector being assigned to the individual for payment of his tax dues.
Also VDP can be utilized only once. Once a tax payer receives benefits of VDP on an issue, a second submission on the same will not be entertained. A second submission of VDP will however be accepted only if the circumstances mentioned in it are beyond the tax payers control. If any VDP submission is found to have no information about any previous filed disclosure and CRA finds out about it, the disclosure will be rendered as denied and invalid.
Voluntary Disclosure Program is no doubt a type of a tax amnesty given to tax payers of Canada by the Canada Revenue Agency. The tax payers that believe that they have revealed any information that should be given to CRA or fear an audit or investigation by the CRA can benefit from VDP and save the penalty amounts.
Voluntary Disclosure Program or VDP is a chance for all taxpayers to escape any penalty that may be levied on them owing to any kind of tax evasion, such as absence of any incomplete, missing or incorrect information while filing returns.