[UPDATED: the program discussed here has changed slightly since the video was first made. See below for the changes.]
So it’s been a few years, you haven’t filed your returns, and now you’ve decided to get honest about it. Good for you! You’ll feel great for having gotten this off your mind.
However, if you owe tax on any of those returns you might actually have to pay some penalties for being late. Fortunately, there is something you can do.
The Voluntary Disclosure Program (VDP) is a program under which the Canada Revenue Agency will accept late filed returns forgive the penalties and part of the interest.
Be aware there are some conditions that you have to meet to be able to be eligible for voluntary disclosure.
- The return must be voluntary. That means it must be a return that the Canada Revenue Agency (CRA) has not specifically requested from you. ‘Voluntary’ in this case means that you’ve chosen to file without being told to do so.
- The return must be accurate, to the best of your knowledge. It must report all taxable income from all sources without any omissions.
- The return must be at least one year late.
- The return must show an amount owing (not a refund). There is no penalty for late filing if you don’t owe tax, so you don’t need the VDP if this is the case.
The Voluntary Disclosure Program is actually very simple. The returns do go to a different office from regular returns, with a cover letter, and a very simple form that basically outlines that you are requesting taxpayer relief.
[UPDATE AS OF 2018]
CRA has added a new requirement to the VDP.
- You must pay the full amount of tax owing before you can be considered for penalty and interest relief. Note that this means you need pay ONLY the tax portion of what you owe CRA. Their new rules only specify that the underlying tax must be paid, not the penalties and interest which you are requesting to be waived.
CRA says that a cheque in the amount of the tax owing can be enclosed with the rest of the Voluntary Disclosure submission. If the amount has been paid before formally requesting relief through the VDP, a copy of the cancelled cheque, a screenshot of the payment, or a bank statement should suffice as proof of payment.