Diane Lebouthillier, Minister of National Revenue, has announced changes to the Canada Revenue Agency’s Voluntary Disclosures Program that will tighten the eligibility criteria to access the program.
The VDP is a way for taxpayers to correct errors in their tax affairs. “However, this program has been used by certain wealthy individuals and corporations as a way to avoid the consequences related to their aggressive tax planning,” states a Dec. 15 announcement from the CRA.
Tightening access to the program is aimed at ensuring the VDP fulfills “its purpose of allowing Canadians to come forward and correct honest mistakes,” says the CRA.
Creation of a new Limited Program
The formal changes to the VDP will include the creation of a new Limited Program, which will offer more limited relief to taxpayers who have intentionally avoided their tax obligations. The changes will also require payment of the estimated taxes owing as a condition to qualify for the program – this payment was not required in the past. It will cancel relief if it is subsequently discovered that a taxpayer’s application was not complete due to a misrepresentation and it will eliminate the process for taxpayers and authorized representatives to make disclosures on a no-names basis, says the announcement.
The revised policy reiterates that the CRA will continue to restrict participation in the VDP if it has already received information on a taxpayer’s potential involvement in tax non-compliance, “for example, a leak of offshore financial information such as the Paradise Papers, or other information that names the taxpayer.”
“The Government of Canada is committed to cracking down on tax evasion and aggressive tax avoidance to ensure a system that is responsive and fair for all Canadians. The changes to the Voluntary Disclosures Program are part of these efforts, which will allow the Agency to crack down even further on those who are intentionally breaking the law. Because of our investments, the Agency will have the resources, the staff and the tools to gather information. In this light, the CRA will re-examine the VDP in the coming years, with the goal of further restricting the relief it offers,” said Lebouthillier.