The Voluntary Disclosures Program (VDP) in Canada
Canadian taxpayers can correct tax reporting errors via the Voluntary Disclosures Programme (VDP).
The VDP allows eligible taxpayers to avoid prosecution and some penalties if they voluntarily disclose past tax reporting errors. It is important to note that not all disclosures of all types of reporting errors are eligible under the programme and there are specific procedures that must be followed for a successful disclosure.
To make a voluntary disclosure, taxpayers must provide the CRA with complete and accurate information regarding the error, including the relevant tax years and supporting documentation. Once the CRA has assessed the disclosure, they will notify the taxpayer of any penalties and interest owed, if applicable. Effectively, the current programme requires effectively confessing to past errors without any assurances as to how the Canada Revenue Agency (CRA) will address their specific issue in terms of penalties, interest or prosecution.
If you believe you may have made an error in your tax reporting, the VDP may be an option for you to consider. We are glad to discuss this option with clients and guide them through the process if it is their best option.