GST/HST – Overview
Who can apply?
Registrants and any other person who is required to report or remit an amount as or on an account of tax can make an application to the Voluntary Disclosures Program (VDP). The term registrants includes:
- a goods and services tax / harmonized sales tax (GST/HST) registrant/claimant
- an excise duty licensee / registrant
- an excise tax licensee
- an excise tax refund claimant
- an air travellers security charge registrant
- a designated air carrier
- a registered exporter of softwood lumber products
The VDP allows registrants the chance to correct inaccurate or incomplete information, or to disclose information not previously reported. Through the VDP, registrants may apply for relief from penalty, and interest for disclosures related to GST/HST, excise tax, excise duty, the softwood lumber products export charge and the air travellers security charge.
Examples of what a GST/HST disclosure may involve are:
- undisclosed tax liabilities
- improperly claimed input tax credits
- refunds or rebates
- unpaid tax or net tax from a previous reporting period
- any other amount not previously reported to the Canada Revenue Agency (CRA)
Your disclosure may also relate to incomplete information on a return for a reporting period or a failure to file information returns as and when required under the relevant legislation.
Go to GST/HST Memorandum 16-5 for more information.
For more information on collecting, recording, calculating, and remitting GST/HST, go to RC4022 General Information for GST/HST Registrants.
GST/HST categories and potential relief
As of March 1, 2018, GST/HST, excise tax, excise duty, the softwood lumber products export charge and air travellers security charge VDP applications will be processed under three categories:
- the wash transactions program
- the general program
- the limited program
The determination of which category an application will be processed will be made by the VDP on a case-by-case basis.
Wash transactions program
Disclosures generally considered to be wash transactions are those where a supplier has failed to charge and collect GST/HST from a registrant who is entitled to a full input tax credit. The relief provided through the wash transactions program is provided only for applications involving GST/HST ‘wash transactions’ that are eligible for a reduction of penalty and interest under the policy stated in GST/HST Memorandum 16-3-1, Reduction of Penalty and Interest in Wash Transaction Situations.
The wash transactions program provides full relief to registrants who want to correct unintentional errors. If your application is accepted into the wash transactions program, you must disclose information on any non-compliance during the four years before the application is filed. Through the wash transactions program you will not be referred for criminal prosecution related to the information being disclosed. Also, applications accepted into the wash transactions program may be eligible for 100% penalty and interest relief.
The general program provides relief to registrants who want to correct unintentional errors. If your application is accepted into the general program, you must disclose information on any non-compliance during the four years before you filed your application.
Through the general program you will not be referred for criminal prosecution related to the information being disclosed. Also, applications accepted into the general program may be eligible for 100% penalty relief and the relief of 50% of the applicable interest.
The general program provides relief for applications disclosing non-compliance or errors including, but not limited to, situations involving:
- GST/HST wash transactions that are not eligible for a reduction of penalty and interest under the GST/HST Memorandum 16-3-1
- reasonable errors
- failure to file information returns
- no gross negligence or deliberate avoidance of tax
- over-claimed rebates
The limited program limits the level of relief for taxpayers who intentionally avoided their tax obligations. If your application is accepted into the limited program, you will not be referred for criminal prosecution with respect to the disclosure and no gross negligence penalty will be applied even where the facts establish that you are liable for such a penalty. However, other applicable penalties will still be applied and no interest relief will be provided.
Examples of applications where the facts suggest that there is an element of intentional conduct on your part or a closely related party include, but are not limited to, situations where:
- GST/HST was charged or collected but not remitted
- efforts were made to avoid detection (for example, participation in the underground economy)
- the disclosure is made after an official CRA statement regarding its intended specific focus of compliance (for example, the launch of a compliance project or campaign) or following broad-based CRA correspondence (for example, a letter issued to registrants involved in a particular sector about a compliance issue)
- there had been deliberate or wilful default or carelessness amounting to gross negligence
Applications by corporations with gross revenue in excess of $250 million in at least two of their last five taxation years, and any related entities, will typically be considered through the limited program. Also, in all cases, the following factors may be considered when determining which category a VDP application should be processed:
- 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
The existence of a situation or one factor will not necessarily mean that you are eligible only for the limited program. For example, a sophisticated registrant may still correct a reasonable error through the general program.
Forms and publications
- Form RC199, Voluntary Disclosures Program (VDP) Application
- GST/HST Memorandum 16-5, Voluntary Disclosures Program
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