Mistakes will happen. We all know that. If I were to make a typo in this blog and it somehow passed through an editor, I?m sure we?d have plenty of comments pointing out the error. That would be an easy mistake to fix, and a harmless one at that. But it is sometimes far easier to notice the errors of others than to recognize our own, right? I mean, if we noticed our mistakes at the time we made them, we would correct them as soon as possible and it?s probably no one else would be the wiser.
The time a reader called me out because I used the American spelling of ?cheque? didn't quite stick with me through the night. Providing inaccurate information to the Canada Revenue Agency, however, would make me a bit queasy. Luckily, there is a program to ensure that Canadians can come forward with corrections and new information, regardless of whether said information was purposefully withheld. This is called the Voluntary Disclosures Program (VDP).
I am going to venture a guess that most of the people who use this service intended to hide or falsify information, but I do believe that accounting mistakes can happen, especially if you're dealing with deduction or more complex matters. And I'm sure there are people in the world who have actually forgotten about a stream of income. Not many, but I'm sure there are a few of them.?The VDP allows taxpayers to come forward with any inaccurate or incomplete information on their CRA file. It also allows taxpayers to disclose information they have not reported, for whatever reason. By making a valid disclosure, taxpayers can avoid penalization or prosecution down the line. Not only does this provide an opportunity to correct honest mistakes, but it also allows for a person to correct a lapse in judgment, such as an attempt to deceive the CRA by hiding income or claiming inapplicable expenses.
A disclosure may be made for Income Tax and Goods and Services Tax/Harmonized Sales Tax (GST/HST) purposes, as well as for charges under the Softwood Lumber Products Export Charge Act, 2006, or the Air Travellers Security Charge Act. To make a voluntary disclosure, one must meet four conditions. The disclosure must be voluntary, complete, involve the application or possible application of a penalty, and include information that is more than one year overdue.
If the CRA accepts your voluntary disclosure, you may only need to pay the taxes or charges owed (with interest). These charges might be due to undeclared income, undeclared GST/HST that you collected, unpaid excise taxes, or unremitted payroll deductions. The appropriate forms can be found on the CRA website, though supporting documentation may also be required.
If your disclosure is accepted, the CRA might even offer relief on some of the interest attached to your charges. It is also possible to discuss the VDP with a worker on a no-name basis. These discussions are informal and non-binding, according to the CRA.
A couple of things to keep in mind:
- A disclosure will not be considered voluntary if the CRA finds out the taxpayer has become aware of an audit, investigation, or enforcement action.
- In the event the voluntary disclosure does not have an associated penalty, the taxpayer cannot seek relief. ?Penalty types include a late filing penalty, a failure to remit penalty, an installment penalty, and a discretionary penalty (such as an omission penalty or a gross negligence penalty).
- Under normal circumstances, a person can use the VDP only once.
- The CRA expects a taxpayer to disclose all mistakes and omissions, otherwise it will not extend the benefit of the VDP.
Have you ever made a mistake when dealing with the CRA? If so, did you ever use the Voluntary Disclosure Program? Do you think most people who use the VDP purposefully withheld information, or provided accidental inaccuracies?
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