Voluntary Disclosures Program v2.0

Compliance Programs Branch
GST-HST and Digital Compliance Directorate

On this page

• Overview & Privacy Impact Assessment Initiation (PIA)
• Summary of the project, initiative or change
• Risk identification and categorization

Overview & Privacy Impact Assessment (PIA) Initiation 

Government institution

Canada Revenue Agency

Government official responsible for the PIA

Cathy Hawara
Assistant Commissioner
Compliance Programs Branch 

Head of the government institution or Delegate for section 10 of the Privacy Act

Lia Jackson
Director
Access to Information and Privacy Directorate
Public Affairs Branch

Name of program or activity of the government institution

Tax Services and Processing

Standard or institution specific class of record:

Voluntary Disclosures Program
Record Number: CRA CPB 264

Standard or institution specific personal information bank:

Voluntary Disclosures Program
Bank Number: CRA PPU 220
TBS Registration Number: 20090529

Legal authority for program or activity

The Minister of National Revenue can provide relief from any penalty or interest, according to the following provisions:

• Subsection 220(3.1) of the Income Tax Act;
• Sections 88, 281.1 and 284 and subsection 284.1(3) of the Excise Tax Act;
  • Section 4 of the Credit for Provincial Relief (HST) Regulations SOR/2011-57;
• Sections 173 and 255.1 of the Excise Act, 2001;
• Sections 30 and 55 of the Air Travellers Security Charge Act;
• Section 37 of the Softwood Lumber Products Export Charge Act, 2006;
• Subsections 85(1) and 120(1) of the Select Luxury Items Tax Act;
• Subsections 100(1) and 125(1) of the Greenhouse Gas Pollution Pricing Act; and
• Subsections 26(1), 26(2), 33(7), 48(1) and 48(2) of the Underused Housing Tax Act.

According to section 94.1 of the Tax Administration Act, the Minister of National Revenue must use discretion to waive or cancel a selected listed financial institution’s interest, penalties, or charges for its Québec sales tax obligations.

Summary of the project, initiative or change

Overview of the Program or Activity

In this document, the term "taxpayer" includes an individual, an employer, a corporation, a partnership, a trust, 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 and any other person who is required to report or remit an amount as or on account of tax.

The purpose of the Voluntary Disclosures Program is to promote voluntary compliance towards tax obligations such as the accounting and payment of duty and tax provisions under the Income Tax Act, Excise Tax Act, Excise Act, 2001, Air Travellers Security Charge Act, the Softwood Lumber Products Export Charge Act, 2006, the Select Luxury Items Tax Act, the Greenhouse Gas Pollution Pricing Act, the Underused Housing Tax Act and section 94.1 of the Tax Administration Act.

The Voluntary Disclosures Program encourages taxpayers to voluntarily come forward and correct any previous errors or omissions in their tax affairs in order to be in compliance with their legal obligations. Through the Voluntary Disclosures Program, taxpayers can make an application to correct inaccurate or incomplete information, or to disclose information not previously reported to the Canada Revenue Agency. 

The Voluntary Disclosures Program grants relief on a case by case basis to taxpayers and registrants who voluntarily come forward to fix errors or omissions in their tax filings before CRA knows or contacts them about it. If a Voluntary Disclosures Program application is accepted by the Canada Revenue Agency, taxpayers will have to pay the taxes owing, plus interest in part or in full. However, taxpayers would be eligible for relief from tax prosecution and, in some cases, from penalties that they would otherwise be subject to under the legislation. 

A disclosure is valid if it:

• is voluntary;
• contains complete information with regards to the error or omission that is being reported;
• involves the application or the potential application of a penalty (or interest in the case of a GST/HST application);
• includes information that is more than one year overdue or more than one reporting period overdue (GST/HST only); and
• includes a payment of the estimated tax owing (or a request for a payment arrangement to cover the estimated taxes owing).

The voluntary disclosures applications relating to income tax disclosures may fall into one of two tracks:

• The first track is a General Program. If accepted under the Voluntary Disclosures Program, these applications will be eligible for penalty relief and partial interest relief.
• The second track is a Limited Program. Applications that disclose non-compliance where there is an element of intentional misconduct from the taxpayer or a closely related party will be processed under this Limited Program and if accepted, will receive reduced relief under the Voluntary Disclosures Program. 

Voluntary Disclosures Program applications relating to GST/HST, excise tax, excise duty, softwood lumber products export charge and air travellers security charge may fall under three separate categories:

• Category 1 (Wash Transactions); specifically provides relief for applications involving GST/HST wash transactions that are eligible for a reduction of penalty and interest under the policy set out in GST/HST Memorandum 16-3-1, Reduction of Penalty and Interest in Wash Transaction Situations.
• Category 2 (General Program), in general terms, Category 2 provides relief for applications disclosing non-compliance or errors.
• Category 3 (Limited Program); in general terms, Category 3 provides limited relief for applications that disclose non-compliance where there is an element of intentional conduct on the part of the registrant or a closely related party.

The determination of whether an application should be processed under Category 1, 2 or 3 will be made on a case-by-case basis.

If a Voluntary Disclosures Program application is accepted, the registrant may be eligible for relief from penalties and interest as follows:

• Category 1 (Wash Transactions), 100% penalty and interest relief.
• Category 2 (General Program), 100% penalty relief and 50% of the applicable interest will be relieved.
• Category 3 (Limited Program); No gross negligence penalty will be applied even where the facts establish that the registrant is liable for such a penalty; however, other applicable penalties will still be applied. None of the applicable interest will be relieved.

In addition to penalty and interest relief, if a Voluntary Disclosures Program application is accepted by the CRA, the registrant will not be referred for criminal prosecution with respect to the disclosure (i.e., for tax offences).

Each request will be reviewed and decided on its own merits guided by principles of procedural fairness which requires decisions to be made in good faith.

What’s New

• As of December 31, 2022, the Program began using two new systems to record, track, and manage voluntary disclosure applications received at the Canada Revenue Agency (CRA).
• As of December 31, 2022, the Program began using a new system to create letters to correspond with program applicants and their authorized representatives.
• The Program is no longer sending all documents for processing by internal mail. Instead, the Program now submits several forms and returns for processing by email. Given the size of documents, the Voluntary Disclosures Program sometimes uses a data transfer system. All CRA employees can access this system and can transfer files up to 250 MB to other users within the CRA.
• As of March 31, 2023, the Program began storing and managing digital documents in an existing, dedicated, secure and restricted repository on the CRA certified shared drive.  

Scope of the Privacy Impact Assessment

This privacy impact assessment identifies and evaluates privacy risks to personal information as they relate to the administration of the Voluntary Disclosures Program’s activities.

In 2018, the Program began focusing more on offshore activities in response to recommendations from the Minister of National Revenue’s Offshore Compliance Advisory Committee and the Standing Committee on Finance. This privacy impact assessment will be reviewed and updated as required.

For more information, go to Voluntary Disclosures Program - Overview.

Risk identification and categorization

A) Type of program or activity

Administration of Programs / Activity and Services 

Level of risk to privacy: 2

Details:

When taxpayers voluntarily disclose errors or omissions that they did not previously report, the Program uses personal information to determine if their voluntary disclosure meets the eligibility requirements of a valid disclosure. If it does, the applicant would then avoid tax prosecution, qualify for relief from some penalties, and in some cases, for partial interest relief that they would have otherwise been subject to under the Acts noted above.

B) Type of personal information involved and context

Social insurance number, medical, financial or other sensitive personal information and/or the context surrounding the personal information is sensitive. Personal information of minors or incompetent individuals or involving a representative acting on behalf of the individual. 

Level of risk to privacy: 3

Details:

The Voluntary Disclosures Program only handles applications from clients who voluntarily come forward to correct errors or omissions in their tax filings and are seeking relief from potential tax prosecution (in some cases, penalty relief and partial interest relief). As part of the application process, clients are required to provide documentation and other personal information needed for them to comply.

For example, personal information may include: name, contact information, social insurance number and tax information (income, benefits, investments, financial statements, personal and investment property). 

C) Program or activity partners and private sector involvement

With provincial and/or territorial and/or indigenous and/or municipal government(s) 

Level of risk to privacy: 3

Details:

The Voluntary Disclosures Program shares collected information with Revenu Québec, the Province of Ontario and the Province of Alberta, using encrypted electronic communications to:

• verify enforcement action, such as audit activity, to ensure that requests to the Voluntary Disclosures Program are voluntary; and 
• assist the provinces in carrying out their voluntary disclosures programs.

The information disclosed to the above-mentioned parties is: name (first name, last name/business name) and account number (social insurance number/business number).

D) Duration of the program or activity

Long-term program

Level of risk to privacy: 3

Details:

The Voluntary Disclosures Program gives taxpayers a way to come forward and correct inaccurate or incomplete information. The Program also offers taxpayers an opportunity to correct earlier mistakes and put their tax affairs in order. Because of this, it is an ongoing, long-term program and has no set date to be phased out.

E) Program population

The program affects certain individuals for external administrative purposes.

Level of risk to privacy: 3

Details:

The Voluntary Disclosures Program affects taxpayers who have voluntarily come forward to correct inaccurate or incomplete information or to disclose information that they did not previously report to the Canada Revenue Agency.

F) Technology & privacy

1. Does the new or modified program or activity involve the implementation of a new electronic system, software or application program including collaborative software (or groupware) that is implemented to support the program or activity in terms of the creation, collection or handling of personal information?

   Risk to privacy: Yes

2. Does the new or modified program or activity require any modifications to IT legacy systems and/or services?

   Risk to privacy: No

3. Does the new or modified program or activity involve the implementation of one or more of the following technologies?

Enhanced identification methods - this includes biometric technology (i.e. facial recognition, gait analysis, iris scan, fingerprint analysis, voice print, radio frequency identification (RFID), etc.) as well as easy pass technology, new identification cards including magnetic stripe cards, "smart cards" (i.e. identification cards that are embedded with either an antenna or a contact pad that is connected to a microprocessor and a memory chip or only a memory chip with non-programmable logic).

Risk to privacy: No

Use of Surveillance - this includes surveillance technologies such as audio/video recording devices, thermal imaging, recognition devices, RFID, surreptitious surveillance/interception, computer aided monitoring including audit trails, satellite surveillance etc.

Risk to privacy: No

Use of automated personal information analysis, personal information matching and knowledge discovery techniques - for the purposes of the Directive on PIA, government institutions are to identify those activities that involve the use of automated technology to analyze, create, compare, identify or extract personal information elements. Such activities would include personal information matching, record linkage, personal information mining, personal information comparison, knowledge discovery, information filtering or analysis. Such activities involve some form of artificial intelligence and/or machine learning to uncover knowledge (intelligence), trends/patterns or to predict behavior.

Risk to privacy: No

G) Personal information transmission

The personal information is transmitted using wireless technologies.

Level of risk to privacy: 4

Details:

Taxpayers may make a voluntary disclosure through the My Account, My Business Account or Represent a Client portals or by mailing or faxing the National Verification and Collections Centre in Shawinigan. After that, personal information is entered in the case management system. The Voluntary Disclosures Program uses a case management system to record, track, and manage voluntary disclosure applications received in the Agency. Furthermore, Voluntary Disclosures Program officers are required to register all voluntary disclosure cases that meet the five criteria of a voluntary disclosure in a taxpayer registry system. Doing this allows the system to waive the penalties and interest that would otherwise apply to the taxpayer.

The program controls how hardcopy documents circulate. When the program receives a voluntary disclosure application, it scans and stores the documents related to the application in the Voluntary Disclosures Program case management system. Paper documents related to the Program are kept in locked containers in-house until the file is complete. 

H) Potential risk that in the event of a privacy breach, there will be an impact on the individual or employee

Details:

Compromised personal information may lead to financial harm, identity theft and embarrassment for the individual.