( 346 Votes )
“The Canada Revenue Agency’s Voluntary Disclosure program is not adequate protection”.
- Paul DioGuardi, Press Statement : Unprecedented database leak of names and particulars of offshore account holders exposes legitimate Canadian taxpayers to dangerous scrutiny,
April 4, 2013
In 2004, DioGuardi Tax Law pioneered the concept of Tax Amnesty - a truly Protected Disclosure of unfiled tax years and/or unreported income. The Tax Amnesty label was quickly adopted by lawyers, accountants, and any one else who offers assistance in resolving issues with the CRA, and applied to the CRA’s Voluntary Disclosure program, (VDP).
But a Voluntary Disclosure and a Protected Disclosure are not the same. Here’s why:
VDP: Perils and Pitfalls
There are only two circumstances for making a Voluntary Disclosure: to file outstanding tax returns; or to report previously undisclosed income.
In either case, the returns or amended returns you file are automatically flagged for audit.
It can take months for the CRA to finish their assessment. And along the way the auditors will look into your reported income and expenses with gusto. They’ll also consider reviewing the tax filings of any person or business associated with the returns presented under your VDP. And the odds are you, or someone associated with you, will get questions from an auditor before the assessment is completed.
If the VDP is accepted as filed, you’ll be assessed with no penalities and interest at a reduced rate. If it’s not accepted as filed, you’ll be assessed late filing penalties, and possibly other penalties for misrepresentation or failure to disclosure all income, all with interest at the normal and astronomical rate of prime plus 4% compounded daily. That adds up to an interest rate comparable to the costliest credit cards.
Either way – VDP accepted or not – CRA remains in possession of the information you disclosed or they discovered in their audit(s). Make no mistake, the auditors will measure your future returns against what they already know about you. In all but the simplest of tax situations, the protection offered by a VDP is simply inadequate.
DioGuardi Protected Disclosure : Privilege = Protection
Understanding that the VDP is always a behind-the-scenes audit, DioGuardi pre-empts the CRA by reviewing your tax situation as the precursor to an audit. If it is determined that filing the overdue or amended return(s) presents no risk of detrimental exposure, DioGuardi may invoke the opportunity of the VDP, always under the protection of solicitor-client privilege, to reduce interest and eliminate penalties. However, at all times your financial information is protected from unnecessary scrutiny. The CRA is provided only what’s required for the assessment of the tax years at issue. If the CRA pressure for additional disclosure, the VDP is withdrawn.
If risk is identified, DioGuardi considers more effective legal strategies to present your tax returns to the CRA and limit the scope of any ensuing audit or investigation.
At all times, VDP or not, you and your financial information remain under the protection of solicitor-client privilege until your tax matter is resolved.
Before you rush into a VDP, consider your exposure. Talk to DioGuardi about your risk and the greater value of Protected Disclosure.
Call DioGuardi NOW: 1 877 4 DIO TAX