Voluntary Disclosure & Back Taxes
Have you been charged penalties on an unpaid tax debt? If you are in this unfortunate position, you may need immediate, expert help. You may be able to make a voluntary disclosure and avoid penalties – but speak with us first, before taking any action.
The experienced Tax lawyers at Rogerson Law Group help businesses and individuals to settle their tax debt as soon as possible, helping them avoid penalties and negotiate mutually agreeable settlements of their tax debts.
How can a penalty be avoided?
You can avoid a penalty by making a voluntary disclosure. Under the CRA’s Voluntary Disclosure Program, a tax payer who suspects they owe back taxes and could be issued with penalty, can avoid such a penalty if they make a voluntary disclosure.
In many circumstances you can avoid the imposition of penalties where you have made a voluntary disclosure to the CRA about, for instance, incomplete information provided in a tax return; or omitting to provide relevant information. To qualify under the Program, the information or return must be more than a year old (the Program does not apply to current filings).
The information you provide must also be complete, with all information for all the relevant periods requiring correction. You won’t get away with a ‘partial’ voluntary disclosure!
So if you have not filed for a few years, and you owe back taxes – making voluntary disclosures should be your preferred option to settle the taxes due. We advise that you avoid waiting for the CRA to start an investigation because you could face penalties (and a potential criminal prosecution).
When will voluntary disclosure not avoid penalties?
A voluntary disclosure will help you avoid a penalty if you proactively instigate it. If you contact the CRA first, and volunteer the missing information, the CRA’s policy is not to impose a penalty in those circumstances.
However, where the CRA prompts your voluntary disclosure you will not avoid a penalty. If the CRA has instigated a tax audit and you then provide the information; or the CRA otherwise elicits the disclosure from you – the penalty will likely remain.
What if the penalty resulted from an error?
There are cases where a penalty is imposed on a tax payer in circumstances where an error took place on the part of the authorities. There may, for instance, be a significant miscalculation on the part of the CRA. In these case, there are provisions where the penalty (and related interest) can be waived or cancelled.
The Tax penalties team at Rogerson Law Group is led by Norman MacDonald a specialist in tax litigation and asset protection with extensive international experience, having practised in Bermuda, England and Europe.