A voluntary disclosure program is an arrangement that allows taxpayers to correct filings which may have been submitted incorrectly or with deficits without the fear of facing penalties from the government. These programs vary from country to country, according to the laws and the situations of an individual. It must be voluntary and complete when it is filed, since it may produce penalties for the individual filing it. In Canada, taxation and the laws surrounding it is regulated by the CRA (Canada Revenue Agency). This organization promotes Voluntary Disclosure through a program called the VDP (Voluntary Disclosures Program) and encourages people to submit filings in accordance to it. Through the VDP an individual may submit corrections to filings that they may be prosecuted for.
There are many reasons that an individual might participate in Canada's Voluntary Disclosure Program (VDP). Any taxpayer can make a disclosure-- even if they are not a Canadian citizen. So long as they pay taxes to the Canadian government, they qualify for this program. Information that might be disclosed includes (but is not limited to)unreported personal or business related income, unreported with-holdings, late filed tax returns, and expenses which an individual failed to record claim. By filing a voluntary disclosure to the CRA, an individual is able to pay the taxes which they owe (plus interest), thereby avoiding prosecution and other penalties. If anonymity is important, the disclosure can be filed under the 'no-name' policy-- under which an individual does not refer to him or herself by name but still supplies supporting information to their claim so that they or their business can avoid penalties. A n individual simply has to print the required forms for the Voluntary Disclosure Program, which are available through the Canadian Revenue Agency's website, fill them out accordingly, and submit them. The forms can be submitted in every Canadian Province (Alberta, Quebec, Newfoundland, etc) through the mail. If a person has questions about the process, they can call a representative or get in contact through email-- both of which are also available through the Canadian Revenue Agency's website. After the proper documents are submitted, they are processed by the CRA and a letter of acknowledgement will generally be sent two weeks after the documents are received. This system has been in place since October of 2013. The date which the disclosure is effective starts from the date which the envelope is stamped-- not the date which the documents are received and processed. The individual who submitted the documents will start receiving the program's benefits immediately. Depending on the situation, the Canadian Revenue Agency may or may not send a secondary letter requesting additional information from the individual. After this, there is an additional 30 days which the individual can send his or her amendments to the disclosure. Once the CRA reviews the submission, they will advise the person who submitted the disclosure to the best of their abilities. If the individual disagrees with this advice, he or she may choose to reject it, according to their personal needs. From this point on, the situation is generally finished-- though if the information submitted is particularly complicated (such as back taxes from a long time ago or very suspicious with-holdings) the process may be extended longer.
After an individual submits documents of Voluntary Disclosure to the CRA, they are expected to be compliant in their future behaviors. Taxes and interests are expected to be paid in a timely manner, and they are expected to willingly submit information regarding their personal or business related incomes. The VDP is not a program that people who with-hold information or taxes can use again and again-- it is a program that extends mercy so that both the taxpayer and the government can benefit. If an individual consistently shows noncompliance in regards to taxation and other information and consistently uses the Voluntary Disclosure Program to shirk both responsibility and punishment, the Canadian Revenue Agency may take notice and take action against an individual who so often abuses the system. Therefore, it is in the taxpayer's best interest to use the Voluntary Disclosure Program only as a way to amend honest mistakes, not as a 'get out of jail free' card. Individuals who abuse the system are only making it more difficult for themselves in the end, and will face greater punishments. The Voluntary Disclosure Program is one of Canada's invaluable resources, and taxpayers who use it to its full potential will be better off in the end.