GST/HST - Voluntary Disclosures Program - Overview
Who can apply?
GST/HST registrants as well as those who are required to report or remit an amount such as:
- an excise duty licensee or/ registrant
- an excise tax licensee
- an excise tax refund claimant
- an air travelers security charge registrant
- a designated air carrier
- a registered exporter of softwood lumber products
Should you apply?
Situations when you should consider applying for relief include:
- you have undisclosed tax liabilities
- you did not charge, collect, or report GST/HST for any reporting period
- you claimed ineligible input tax credits, refunds or rebates
- you provided incomplete information on a return for a reporting period
- you did not file an information return
For more information about when relief may or not be considered, go to GST/HST Memorandum 16-5. For information on collecting, recording, calculating and remitting the GST/HST, go to RC4022 General Information for GST/HST Registrants.
What do I need to initially submit?
For us to make a decision on your application, you need to submit a completed and appropriately signed Form RC199 (or equivalent letter) together with all the CRA returns, forms and schedules needed to fix the error or omission.
If after our initial review, we determine that your application is missing information and/or documentation, we may deny your application. At times, we may contact you to request the missing information/ documentation and negotiate a reply date.
Does everyone receive the same relief?
No, the type and level of relief is granted on a case by case basis
Once the needed information is submitted (as above), a further review begins to ensure your application meets the five program conditions to qualify for relief. If it does, and based the information you provided, your application will be placed into one of the three programs:
- The Wash Transactions Program
- The General Program
- The Limited Program
Wash Transactions Program
A “wash transaction”, generally speaking, is one where a supplier has failed to charge and collect GST/HST from a registrant who is entitled to a full input tax credit.
If accepted into the Wash Transactions Program:
- you will not be referred for criminal prosecution related to the information disclosed, and
- you may be eligible for full penalty and interest relief on the transactions disclosed
Wash transactions that are eligible for this relief are stated in GST/HST Memorandum 16-3-1, Reduction of Penalty and Interest in Wash Transaction Situations.
General Program
The General Program is intended for registrants who come forward to correct unintentional and reasonable errors including, but not limited to:
- GST/HST wash transactions that are not eligible for reduced penalties or interest under the GST/HST Memorandum 16-3-1
- the failure to file information returns
- over-claimed rebates
If accepted into the General Program:
- you will not be charged penalties
- you will not be referred for criminal prosecution related to the information disclosed, and
- you may be eligible for a reduced interest rate of 50% of the applicable interest rate for the years disclosed
For example, in January 2018, while preparing its financial statements for the year ended December 31, 2017 a registrant discovers that due to an accounting error, its GST/HST return for the quarterly reporting period ending June 30, 2017, overstated its input tax credits. The registrant had claimed input tax credits that it had already claimed in the previous reporting period. This would normally qualify under the General Program.
Limited Program
The Limited Program is for registrants who intentionally avoided their tax obligations.
If accepted into the Limited Program:
- you will not be referred for criminal prosecution related to the information being disclosed
- you will not be charged a gross negligence penalty; however, you will be charged other penalties as applicable, and
- no interest relief will be provided
What factors are considered when determining the appropriate program of relief?
In all programs, the following factors are considered:
- the dollar amounts involved
- the number of years of non-compliance
- the sophistication of the registrant
- how quickly the registrant acted to correct their non-compliance upon its discovery
- if the application is made after the CRA issues a statement or broad-based correspondence about where it plans to focus compliance efforts (for example, it starts a campaign or sends a letter to registrants involved in a particular sector about a compliance issue)
Are there additional factors for the Limited Program?
Yes, the following are some of the additional factors considered when determining whether to accept an application into the Limited Program:
- the GST/HST was charged or collected but not remitted
- efforts were made to avoid detection (for example, participation in the underground economy)
- there had been deliberate or wilful default or carelessness amounting to gross negligence
- applications by corporations, and any related entities, with gross revenue above $250 million in at least two of their last five tax years will typically be considered through the Limited Program.
Even if your situation includes one of these factors, you may still be eligible for the General or Wash Transactions programs. For example, a sophisticated registrant may still correct a reasonable error through the General Program.
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