Canada is known for being a peaceful country that has a typically stable economy, universal healthcare and many other government provided benefits citizens utilize. One major benefit Canada offers its citizens is the practice of voluntary disclosure. Voluntary disclosure is a practice put in place by the Canada Revenue Service. Each year the vast majority of Canadian citizens file their taxes, yet many people forget to include some key piece of income, deductions or tax withholdings. Unfortunately, as with any internal revenue service, if Canada finds out that a citizen has withheld information, there can be fines, penalties and even legal action taken against that citizen. However, the Canada Revenue Agency, from here on out referred to as CRA, allows the practice of voluntary disclosure because mistakes happen and they happen frequently. As long as the person coming forward is doing so voluntarily and includes accurate and complete information to the best of their ability, they are not liable for any monetary cost, save the money and taxes they owe on the newly claimed asset.
Many citizens do not disclose forgotten tax information to their government’s internal revenue service, often due to several factors. First, citizens are afraid of further punishment for coming forward with new information, whereas the government may never have even discovered said new information. Additionally, it is often difficult to amend a tax return and often people do not have the money to do so or to go back to their accountant to amend their tax return. Often, accountants are an expensive paid for from a tax return and can be difficult to seek advice from after the fact due to a lack of citizen’s liquid assets. Lastly, some citizens may not be willing to go through long wait times in reprocessing their tax returns. Canada’s voluntary disclosure program addresses each of these concerns. Citizens for the most part, assuming their statement is accurate and complete, need not be afraid of enormous fees and penalties. Assuming, as stated above, the statement given by the citizen is complete and accurate among several other requirements, Canada makes it clear that the citizen should only be liable for the taxes owed on the newly report income or deduction. This makes it much more appealing for citizens who may have held off for fear of punishment to want to amend their taxes and report forgotten or lost income or deductions. Additionally, Canada’s voluntary disclosure practice streamlines the process in which citizens report these lost or forgotten tax amendments. For example, most forms for the process are available on the CRA’s website and can be downloaded and filled out at a citizen’s convenience. These forms may be filled out a certified personal account, but again they are not mandated to be and therefore put some power back into the Canadian citizen’s hands. Finally, there is above mentioned fear that it will be difficult to budget for additionally owed taxes if a citizen is to amend a tax return, due to long processing times and an uncertainty of when their amendment might get filed. Canada provides a quick turnaround time on their voluntary disclosure program. Assuming that the correct forms have been filed accurately and completely and have been submitted through appropriate channels, Canada quotes an estimated two week to one month to address and approve an amended tax return. This is a much quicker time frame than many other internal revenue services can offer, and therefore cuts down on Canadian citizen’s anxiety about reporting new income or adjustments.
Canada’s voluntary disclosure program is designed to address several complaints of citizens when it comes to reporting new or different data on a citizen’s tax documents. Fortunately, a citizen who chooses to come forward with new tax information can be assured of several things. Firstly, that citizen can be assured that they will not face any additional fees besides their original taxes owed assuming their coming forward was accurate and completely voluntary. Secondly, Canadian citizens can get through the amendment process themselves without having to hire a certified personal accountant. Lastly, citizen also experience low wait times for the turnaround on an amendment, allowing them room to budget for their expected taxes. While the CRA’s voluntary disclosure program is surely not perfect, there are logical reasons, explain above, for it existence.