How CRA's Voluntary Disclosure Program Benefits Taxpayers

Taxation is complex, especially for taxpayers who have no formal education and training in the subject. Yet, everyone who meets the criteria set by the revenue service of their country has to file a tax return.

What's worse is that the onus is on the individual to understand the law and all the stringent guidelines for submitting a correct account of their income and compute the tax they have to pay. Delay your submission or make a mistake in your calculations, and you're liable to incur penalties and interest. You might even end up in jail.

In 2019, about 27.2 million Canadians submitted their returns. Aside from these individuals, some did not file their taxes on time. Some taxpayers may have made errors in their declaration.

These groups of people stand to face financial charges and imprisonment when the Canada Revenue Agency (CRA) catches up with them eventually.

Fortunately, the CRA has an initiative that allows taxpayers to come forward and make good on their mistakes voluntarily. The Voluntary Disclosure Program (VDP) is a way for defaulters to fulfill their tax obligations and possibly avoid penalties and prosecution.

If you want an in-depth explanation of the legal aspects of the scheme, why not look here for professional advice. Here's a brief idea of how the VDP works:

The CRA's Voluntary Disclosure Program

The VDP offers Canadian taxpayers the opportunity to come forward on their own accord to file overdue returns and correct mistakes in their submissions.

There are no guarantees that everyone who wants to avoid action by the CRA will go free. The agency reviews every application to determine if it meets the set criteria.

How the VDP Benefits Taxpayers

If you've done any of the following, you're at risk of getting into trouble with the CRA. You should apply for the Voluntary Disclosure Program for the benefits it offers. Do so if:

• You failed to submit a return on time.

• You didn't declare some or all of the income you received.

• You deducted expenses that aren't allowed under the law.

• The tax return you filed was incomplete.

• You miscalculated your taxes.

• You unintentionally misinterpreted the legal requirements.

You Can't Escape the Law

People have tried numerous ways to get away with not paying their dues to the CRA. However, the agency always catches up with them eventually.

The government body has financial sources that report transactions of all citizens, including amounts paid to individuals. If you have not declared your income, it's only a matter of time before you're caught.

The VDP is your chance to own up and avoid severe repercussions if the CRA summons you.

Avoid Prosecution

If you apply to the scheme and you're successful, you'll be exempt from prosecution and jail time. However, this doesn't mean you won't have to pay the taxes that you owe.

There's the possibility that the CRA may not impose penalties. You'll incur interest on the overdue amount, which, if you're lucky, might be reduced by a portion the agency sees fit.

Qualification Criteria

As mentioned earlier, you won't necessarily qualify for the benefits offered by the Voluntary Disclosure Program.

You must meet specific criteria that include:

• You haven't received any notice from the CRA.

• You're making a voluntary effort to come clean.

• Your tax position is likely to involve penalties.

• You're submitting a late return.

• You want to make amends on earlier mistakes.

Conclusion

If you're in a situation that involves facing drastic action by the CRA, you must take advantage of the lifeline the VDP offers. Not doing so will only lead to more significant problems, which include jail time.

To stand a better chance of getting your application accepted, you should get professional help. An experienced tax expert will make sure that you meet all the requirements.