Canadian taxpayers are required to self-assess and report their income each year. Often taxpayers reported their income incorrectly because errors are made. The Canada Revenue Agency (CRA) will reassess a taxpayer’s income if the agency discovers that a taxpayer has reported his or her income in an incorrect manner. Reassessments of a taxpayer’s income can often be accompanied by penalties and interest for failing to report income.

The Income Tax Act provides that a taxpayer may avail himself or herself of penalties for improperly reporting income if the taxpayer voluntarily discloses the error. The Act provides relief for penalties that arise from the error, but does not provide for relief of taxes from the error.

There are certain conditions that must be met for a voluntary disclosure to be accepted:

    • The disclosure must be made voluntarily (before CRA takes action to require compliance);
    • There must be penalties associated with the error;
    • The error must be at least one year overdue; and
    • The information provided must be complete (cannot a partial disclosure).

The Income Tax Act only provides for relief from penalties for the period that is ten years before the filing of the application.

After a voluntary disclosure application is made, the taxpayer is expected to remain compliant. The CRA will not accept a voluntary disclosure from the same taxpayer for the same matter.

Contact our tax litigation lawyers to begin your voluntary disclosure program today.

This article is for informational purposes only and does not constitute legal advice. If you wish to discuss your issue with a lawyer, contact today.  +1 (613) 706-1757