CRA May Propose Radical Changes To The Voluntary Disclosure Program

Author:Ms Mariya Honcharova
Profession:Collins Barrow National Incorporated

In April 2016, the Minister of National Revenue established the Offshore Compliance Advisory Committee (“OCAC”) for the purpose of advising the Minister and the Canada Revenue Agency (“CRA”) on administrative strategies to deal with offshore compliance. In the fall of 2016, OCAC issued a report on CRA's Voluntary Disclosure Program, which was endorsed by the Minister of National Revenue on December 8, 2016. On February 22, 2017, the CRA released its formal response, in which it indicated that the review of the recommendations prepared by OCAC will be completed by March 31, 2017.

In its report, OCAC makes numerous recommendations that, if implemented, will radically alter the Voluntary Disclosure Program, generally reducing the value of such disclosures and increasing taxpayers' compliance costs. OCAC recommends reducing the value of relief available to a taxpayer in certain circumstances, in which a high degree of taxpayer culpability contributed to the failure to comply. Factors such as sophistication of the taxpayer, the dollar amount of tax owing, the length of non-compliance and efforts taken to avoid detection may all be considered when determining the quantum of relief granted. Assuming this recommendation is accepted, a significant increase is likely in the amount of interest and penalties applied to taxpayers in certain circumstances where currently penalties are waived and interest is reduced. 

OCAC also recommends that, as part of the acceptance of the voluntary disclosure, a taxpayer be required to pay the estimated tax and interest or provide adequate security within 90 days of filing the disclosure. The current acceptance procedure does not require the taxpayer to pay...

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