The voluntary disclosure system in the Country of Canada is different than any other country in the world. This system enables the taxpayer, whether it’s a corporation, individual, or a trust, to make a voluntary submission regarding their particular tax status to the governing body of taxation on a province level and also on a national level. There is a variety of different pieces of information that can be used during the disclosure process and each individual must decide what is most proper. There are many instances in which they rely on the expertise of a tax attorney or chartered accountant before making such decisions. However this preemptive measure can be instrumental in the prevention of having adverse audits during the fiscal year. There are many instances in which businesses and individuals voluntary disclose tax information and end up avoiding severe tax penalties. Some examples of things that people choose to disclose are unreported income which could’ve later been assumed to be laundering activity or possibly racketeering. This type of reporting is not limited to transactions solely within Canada it can also include those transactions outside the country as well, especially ones within Europe. In the current day there are reports of individuals reporting income that was once hidden in Geneva, Switzerland.
However, people are more cognizant of the fact that many regulatory bodies have become more keen to the strategies of avoiding taxation. In fact, the primary reason Greek is experiencing such horrific economic times is because of tax evasion and money laundering. This was the catalyst to the countries bonds being so high. The only way they can attract people to invest in their country is by offering a very competitive rate especially against its other European counterparts, the United States, and Canada. Greece has actually had national bond rate in the 20% bracket for the last several years which is astonishing. This is the only way they can potentially rebound from the substantial damage their economy has suffered. In order to fund projects such as schools, government buildings as well as road construction they need to borrow money and pay substantial interest on that money.
Additional things that have been reported by Canadian citizens since the initiation of the voluntary disclosure system has been unreported source deductions, withholding tax for business owners, late filed income tax returns, etc. The primary reason citizens and even non citizens of Canada are urged to make these voluntary disclosures is because it helps the taxpayer pay only the taxes they owe plus interest and it can help prevent penalties and criminal prosecution for providing misinformation to the government. A disclosure is consider valid if and only if it fulfills the following 4 criterion. The individual’s disclosure must be voluntary the individual must have not been coerced into providing this information. In other words in can’t be submitted after the CRA has sent out a notice. Second it potentially will require a penalty in most instances. The third thing that voluntary disclosers need to be aware of is the fact that it must state information that is over 365 days due. Most importantly it must be complete, the filer can’t pick and choose what they want to reveal. The CRA recommends that in order to avoid potential delays in processing as well as additional penalties the tax payer should be certain to include as much information regarding the disclosure the first time around. Failure to do so can result in the disclosure being denied all together which can definitely lead to further penalties and potentially jail time. The correct form needed to disclose is called the Form RC199, Voluntary Disclosures Program- Taxpayer Agreement. It actually can be downloaded off the CRA website. A taxpayer mail also write a letter that includes comparable verbiage that the RC199 would ask for. If a tax attorney, chartered accountant, or someone that holds the individual or business or estate’s power of attorney will be submitting the application for them then they must submit a Form T1013 as well. This is called the Authorizing or Cancelling a Representative Form. A Form RC59, Business Consent form may be used as well. The proper method of delivery would be through facsimile or traditional. The address varies based on the particular province in which you live. All this information is found on the CRA website.