By Debra Dowdell, CEO
The Canada Revenue Agency has released a draft of potential changes to the Voluntary Disclosure Program (VDP). The changes have been recommended by the Offshore Compliance Advisory Committee (OCAC), who reviewed the VDP to find areas of improvement that would benefit Canada's taxation policies.The CRA is now requesting public feedback on these changes in an online consultation until August 8, 2017. If accepted, the proposed policy changes would take effect January 1, 2018.
Essentially, the VDP guidelines currently allow Canadians who know they have mistakes on their previously submitted taxes (at least one year old), usually through less-than-truthful claims of income or expenses, to come forward to notify the CRA of their misfiled documents and make the appropriate changes to the information while incurring no penalties or persecution.
The proposed changes would drastically change these policies, including:
- Cracking down on major cases of non-compliance and providing less relief in such cases
- Adding payment of taxes owed as a condition to qualify for the VDP
- Canceling VDP relief for any applications that are found to be incomplete due to wilful misrepresentation
- Making corporations with more than $250 million in gross revenue and/or any whose application involves transfer pricing, excluded from VDP relief
- Changes the calculation of interest relief that accepted applications are eligible for
- Ending VDP relief for applications involving proceeds from criminal acts
The new program will place applicants in one of two categories:
1) the general program, which allows full penalty relief and partial interest relief, or
2) the limited program, for cases of major non-compliance usually citing wilful negligence and fault on the part of the taxpayer, which would only qualify the applicant for some reduced relief.
With so many major changes on the table, it is important to understand the issues covered by the VDP and have your say on the reform process as a Canadian taxpayer.
The CRA has classified these suggestions as merely changing the system to no longer be "one size fits all", but have also wondered, "Is VDP the right program for taxpayers to fix mistakes or should they be dealt with differently? ... We are asking you – when should the VDP apply? Should it apply only to those who knowingly choose to not pay their taxes or also to those who make mistakes on their returns?"
Let CRA know what YOU think of this policy now!