Voluntary Disclosure to the CRA

Sometimes, even with the best of intentions, it can happen that someone misreports or fails to report income or revenues to the Government of Canada, or the Ontario Government. This can happen as easily with personal taxes as it can with small business revenues or corporate income tax. However, if you have already filed a corporate tax return or a personal income tax return, you should take care in how you address this with the CRA, (Canada Revenue Agency) or the government of Ontario.

Voluntary compliance is the basic principle of both the Ontario and Canadian tax systems. However, failure to comply – even through ignorance or misunderstanding – can leave you liable to prosecution.

If you do find yourself in this situation, it may be inadvisable to directly approach the government without first seeking professional advice. If you do so, you will be dependent on the discretion, understanding, and goodwill of whichever agency official you happen to talk to first. They may not inform you of all of your options, and if they choose to start a prosecution, unwinding or reversing it may not be possible. You could be liable for fines of up to twice the assessed amount of the taxes evaded, and a jail term of up to two years.

At Steven Agulnik, CPA, we can assess your situation, and act as an advocate on your behalf. As a certified professional accountant, Steven Agulnik is entitled to approach the CRA and the government of Ontario on your behalf as an anonymous client, and you may be entitled to make what is called a “voluntary disclosure” of unreported revenues. Your representative is entitled to negotiate payment terms with the CRA on your behalf without first disclosing your identity.

Steven Agulnik, CPA is not a tax lawyer. We will review your case with you, and depending on the amount of money involved, and the complexity of your case, we may refer you to a tax lawyer.

Individuals, corporations or their representatives making valid Voluntary Disclosures will not be prosecuted.

We can act as a mediator and an advocate if you need to make a voluntary disclosure to the CRA.

Both the Ontario government and the government of Canada pledge not to prosecute a corporation or an individual who chooses to make a valid voluntary disclosure regarding the reporting of taxable income or revenue. However, the key word here is “valid”. Your disclosure must meet some basic requirements as to transparency, and you are only entitled to make one voluntary disclosure to the CRA without consequence. If through error or inattention you find yourself having to make a voluntary disclosure again, the CRA may consider reviewing your file.

You can read the CRA policy on voluntary disclosure here, and the Ontario government policy on voluntary disclosure here. In most cases, you will have to deal with both levels of government.

Here’s what the government of Ontario has to say about voluntary disclosure:

Voluntary compliance is the basic principle under which Ontario’s tax system operates. Voluntary Disclosure is an important part of this. Individuals and corporations are encouraged to voluntarily approach the Ministry of Finance to correct any deficiencies or contraventions of tax statutes and benefit programs administered by the ministry. Individuals, corporations or their representatives making valid Voluntary Disclosures will not be prosecuted.

If you find yourself in a situation where you could potentially be in trouble with the CRA, don’t panic. There are policies in place to protect you, and we can help you to navigate them.