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If you haven't filed your tax returns on time or haven't reported some of your income, you should fix this immediately as there are extensive civil penalties and potential criminal charges for failure to file an accurate tax return. If you come forward before the Canada Revenue Agency (CRA) catch you, I can help to greatly reduce the potential repercussions by applying under the Voluntary Disclosure Program.
Every resident of Canada is required to file a tax return declaring their world-wide income for each tax year in which they will owe taxes, make a capital transfer, need to file information returns or wish to claim benefits. Corporations are required to file a tax return for every fiscal year even if they are inactive. Failure to file is treated harshly by the CRA and civil penalties are routinely applied to late filed returns. The standard late filing penalty for individuals is 17% of your outstanding taxes and there are a variety of more significant penalties for repeat late returns and for failures to report things like T slips and overseas information forms (as high as $2,500 per form). In addition, criminal penalties of between 100% and 200% of taxes owing and even imprisonment for a term not exceeding 5 years can be imposed by the Court.
To minimize the penalties you could face, it is essential to seek professional help and correct your omissions as soon as possible before the CRA discover your unreported income. Amendments to annual tax returns have increased the likelihood that the CRA will find non-filers through their matching programs by including more third party information, such as the names of sub-contractors and spousal information, on every taxpayers return. Also, recent Court decisions have extended the reach of the CRA's information requests, such as requiring e-Bay to release the names of its major traders and closing down tax havens. There are more ways than ever for the CRA to discover your income. Moreover, non-filing is an issue that your Estate will face if you die without resolving this problem. It will not just go away.
If you have been contacted by the CRA and asked to file your returns, you need to simply file those returns as soon as possible. It may be beneficial to include a letter explaining any exceptional reasons for your failure to file but the most important thing is that you comply with any deadlines provided and let the CRA know the returns are coming. I can help you co-ordinate the filing of your returns if you are worried about this process. If you have not been contacted by the CRA, I can help you to apply under the Voluntary Disclosure Program, which offers significant benefits to those taxpayers who are able to disclose their undeclared income before being discovered by the CRA.
The Voluntary Disclosure Program
The Voluntary Disclosure program basically allows a taxpayer who meets the given requirements to become tax compliant and escape civil and criminal penalties that would be applied if the CRA discovered the omission. The CRA guidelines require that you meet four conditions for the program: You must come forward voluntarily and have not been contacted by the CRA or other authority in any way regarding your outstanding returns; all relevant information must be completely disclosed; a penalty must be applicable; and the information disclosed must relate to tax years over one year ago.
If I determine that you may be eligible for the voluntary disclosure program, I can submit a no-name disclosure on your behalf without the fear of disclosing your identity to the CRA and any enforcement action from the date the written request is submitted to the CRA will not invalidate your disclosure. This buys you some extra time to prepare your tax returns and once these are sent to the CRA, I can negotiate with them as to how many years should be assessed and if the omission of your income was not negligent, I may be able to argue that this should not be assessed at all. The Voluntary Disclosure Program can be used both to file outstanding returns and to correct inaccurate returns and can be a very advantageous initiative in the right circumstances. I strongly advise you to seek legal advice if you have omitted income or not filed for over 10 years as there is a limit on the historic application of the disclosure program.
As part of my fixed fee services, I can file a voluntary disclosure for you for $1,500 plus HST. This does not include preparation of any tax returns and you can either do these yourself or I can recommend an accountant to help. Coming forward to file returns helps to get you back in the system and is especially advisable if you are going through a separation or divorce where ex-spouses often tell the CRA about your tax omissions. Overall, it can be surprisingly therapeutic to deal with the burden of outstanding returns and I have helped bring many taxpayers peace of mind for their own situation and for that of their family. The harsh reality is you are going to get caught someday so you might as well take control of the situation and let me help make it as painless as possible before it gets any further out of hand.
Contact me today to discuss how to file your outstanding tax returns.