Attention: Non compliant taxpayers… There is a way out!!

In its ongoing efforts to maximize recovery for the new Federal Government, CRA has refined, adjusted and become more aggressive in its efforts to scrutinize the actions of Canadian taxpayers.

A tax return preparer was recently sentenced to 4 years in a federal prison for orchestrating and preparing false tax returns for various taxpayers. Another taxpayer received a 12 month conditional sentence (house arrest) as a consequence of failing to report hundreds of thousands of dollars in income.

Other taxpayers have recently been fined or received jail sentences for repeated failures to file tax returns.

All of the foregoing represents an increased vigilance by CRA in connection with the activities of Canadian taxpayers. CRA is sending a clear signal that it is committing greater resources for dealing with tax evaders.

In many instances, the failure to file tax returns starts quite innocently as a consequence of life changing events such as divorce, family sickness, the death of loved ones or, the loss of employment. Because of the calamities faced by the taxpayer, the filing of a tax return is relegated to the lowest priority.

However, when the next year arrives, the taxpayer feels that the filing of a return for that particular year will give rise to CRA’s discovery of the failure to file from the previous year. This leads to a never ending cycle of failing to file.

There are many taxpayers who have unwittingly found themselves in this situation which has arisen rather innocently.

In addition, of course, there are numerous taxpayers who have decided that they simply are not required to pay tax or, feel justified in failing to report some portions of their income.

Thankfully, CRA offers a program known as the Voluntary Disclosure Program (“VDP”) which allows non-compliant taxpayers to correct their sins of the past and “come clean” with CRA.

The result of participating in the VDP is that CRA will not prosecute you, nor will it levy civil penalties against you in connection with your previous failures.

We will provide further details on this fantastic and very welcome program in future articles.

If you have any questions about this matter or any other matter please contact Keith Trussler, Linda Smits or Ainsley Furlonger.