Consulting with Canadians on the Voluntary Disclosures Program

What is the Voluntary Disclosures Program?

While the majority of Canadians pay their fair share of taxes, some wealthy Canadians continue to find ways to not pay what they owe. This is not fair and places an unfair burden on all Canadians. The Government of Canada is cracking down on tax cheats and those who choose to avoid their tax obligations to ensure that everyone pays their share.

The Voluntary Disclosures Program (VDP) provides taxpayers with an opportunity to voluntarily come forward and correct previous omissions in their dealings with the Canada Revenue Agency (CRA). Currently, taxpayers can apply to the CRA to ask for relief of prosecution and penalties. The CRA has reviewed the VDP to ensure that it is delivered in a fair and effective manner, meets the needs of Canadians and that it promotes and recognizes tax compliance from the outset.

The CRA has launched online consultations where the public can provide their input on the proposed changes to the VDP. The CRA will carefully consider all of the input received through the external consultation, as this will inform the government’s next steps. The Minister of National Revenue is expected to announce formal changes to the VDP in the fall of 2017.

The Government encourages all Canadians to participate in the consultation and to provide their views on the proposed changes.

Background - program review

In October 2016, the House of Commons Standing Committee on Finance, in their report to the Government, recommended that the CRA undertake a comprehensive review of the VDP.

On December 5, 2016, the Offshore Compliance Advisory Committee (OCAC), an independent committee composed of tax experts, presented its Report on the Voluntary Disclosures Program to the Minister of National Revenue, with recommendations on how to improve the VDP so that it could be made more effective and more fair. The OCAC recommended the continuation of the VDP but proposed to tighten the criteria for acceptance into the program. This is consistent with CRA’s strategic initiatives and the Agency’s commitment to finding the right balance to ensure tax fairness for all Canadians.

As recommended by House of Commons Standing Committee on Finance, the CRA has conducted a review of the VDP. The CRA is now consulting with the general public on the proposed changes to the program. Canadians are encouraged to participate and to have their voices heard.

What changes are being proposed to the VDP? 

Currently, the CRA’s VDP policy for all taxes has been set out in the Information Circular, IC00-1R5 Voluntary Disclosures Program and is available for all Canadians to read. Disclosures involving GST/HST and excise tax matters are proposed to be addressed in a new GST/HST Memorandum in order to better address the different circumstances and complexities arising under these transaction-based tax systems. The new Information Circular will now outline the VDP policy for disclosures involving income tax and source deductions.

The proposed changes narrow the eligibility for VDP and impose additional conditions on applicants.

The most significant policy change follows the OCAC’s first recommendation that the VDP should offer less generous relief in certain circumstances. The VDP will no longer be a “one size fits all” program. Major cases of non-compliance that are disclosed will not receive the same level of relief as they would through the current program.

A number of other tightening measures are being proposed to the program. This includes measures that would:

  • require the payment of the estimated taxes owing as a condition of qualifying for the program
  • exclude applications that involve transfer pricing and applications from corporations with gross revenue in excess of $250 million from VDP relief
  • exclude applications that disclose income from the proceeds of crime from VDP relief
  • change the way the amount of interest relief available is calculated
  • cancel VDP relief if it is subsequently discovered that a taxpayer’s VDP application was not complete due to a misrepresentation attributable to wilful default

Want to know more? Read the Draft Information Circular and GST/HST Memorandum.

Consulting with Canadians

On June 9, the CRA launched a 60 day online consultation with Canadians on the VDP.

Now that the CRA has conducted a review, it is seeking input from the public on the proposed changes to the program to ensure that it is more responsive, innovative, and fairer for all Canadians.

The CRA is encouraging all Canadians to participate in the consultation and to provide their views on the proposed changes.

Have your say!

Beginning June 9, the CRA will be seeking the comments and recommendations of Canadians and industry stakeholders on amendments to the VDP policy to ensure that it better meets the needs of Canadians. Comments are requested by August 8, 2017.

Share your comments and suggestions

Is VDP the right program for taxpayers to fix mistakes or should they be dealt with differently?

We all want a tax system that is fair and will ensure that all taxpayers pay their fair share so not to place an unfair burden on others. We are asking you – when should the VDP apply? Should it apply only to those who knowingly choose to not pay their taxes or also to those who make mistakes on their returns?

Are we striking the right balance?

When conducting its review, the CRA considered the comments made by OCAC about striking the right balance between helping those who were fully compliant and having appropriate consequences for those who were seriously breaking the rules. With the proposed changes, have we achieved that balance?

Why should you participate?

Everyone has a role to play to ensure a tax system that is more innovative, responsive, and fair for all Canadians. By providing input, you are actively having your voice heard and playing a role in shaping this important policy.

Next steps

The consultations will assist the Government of Canada on determining the next steps for the VDP policy. It is expected that the Minister of National Revenue will announce formal changes to the program in the fall of 2017.

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