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Tax voluntary disclosures for Canadian residents

voluntary disclosuresAs anticipated, the Canada Revenue Agency has been put on notice to restrict its Voluntary Disclosures Program.

Before the Holidays, the Offshore Compliance Advisory Committee formally recommended making the program “less generous” by reducing the interest and penalty relief available, including in cases where the taxpayer’s non–compliance spanned over many years. Another key recommendation is to require taxpayers to “disclose the identity of advisors who assisted with non–compliance”, who could then be liable to penalties or subject to criminal charges by reason of conspiring to enable tax evasion.

A different source indicates that the Canada Revenue Agency will be cutting the relief offered in cases involving a specific jurisdiction in South–East Asia “known to be tax haven”.

McCarthy Tétrault offers a market–leading solution for Canadians holding assets abroad. Over the last 4 years, McCarthy Tétrault has completed hundreds of successful voluntary disclosures, for Canadian residents holding assets abroad.

We already know the pitfalls and have scaled the cost for these services accordingly, including accounting and tax filing fees, and can ensure predictability. We also provide an estimate of our clients’ overall tax liability early on in the process. In these matters, certainty and predictability are paramount.

The program still allows for the disclosure of unreported assets and income with immunity from criminal prosecution, a waiver of civil penalties, partial interest–relief and a general 10–year limitation period for back-taxes. It delivers tax amnesty and important savings.

By: Nicolas X. Cloutier and Jessica Van Acker, McCarthy Tétrault LLP

A little bit more about the Voluntary Disclosures Program:

The Program gives taxpayers a second chance to change a tax return they previously filed or to file a return that they should have filed. Taxpayers can apply to the Canada Revenue Agency (CRA) to ask for relief of prosecution and penalties.

Who can apply? The program is available to any taxpayer.

“Taxpayer” includes:

  • an individual
  • an employer
  • a corporation
  • a partnership
  • a trust
  • a GST/HST registrant/claimant
  • a registered exporter of softwood lumber products

“Once you use the program, the CRA expects you to keep your taxes up to date.” Although, in situations where the circumstances are beyond the tax payer’s control, the CRA may consider reviewing their file a second time.

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