This document has been updated on October 24th, 2017 and reflects the state of the Law, including draft amendments, at that date.

Voluntary Disclosure

Every year, taxpayers are required to file a tax return and calculate their income taxes payable. Taxpayers who knowingly, or in circumstances amounting to culpable conduct, do not comply with the tax laws in their return run a significant risk of being charged penalties when this failure to comply is discovered.

Taxpayers who find themselves in such a situation are encouraged to make a voluntary disclosure to correct the incorrect or incomplete information, or to provide information that had not been previously reported. While they will of course have to pay any income tax owing and related interest, the tax authorities may forego any penalty or legal action.

For such disclosure to be valid 8:

  • It must be voluntary and result from an initiative taken by the taxpayer, and not because the taxpayer is aware of an audit, investigation or other measure undertaken by the tax authorities;
  • There must be full disclosure of all incorrect, incomplete or missing information;
  • It must cover information for which a penalty could be applied;
  • It provides information that is at least more than one year late, or if it is less than one year late, must not be filed simply to avoid the penalties for late filing or late instalments.

Prior to making a voluntary disclosure, taxpayers and their representatives may discuss their situation with the tax authorities, either on an anonymous or hypothetical basis, for a maximum 90-day period.

The CRA is proposing a number of changes to the Voluntary Disclosure Program as of January 1, 2018, to limit eligibility and impose additional requirements on applicants. A consultation document was published in June 2017. The final measures appliable to this program had not been released at the time this document was updated.