Canada: Canadian voluntary disclosure programme rises in popularity

International Tax Review is part of Legal Benchmarking Limited, 4 Bouverie Street, London, EC4Y 8AX

Copyright © Legal Benchmarking Limited and its affiliated companies 2025

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

Canada: Canadian voluntary disclosure programme rises in popularity

Maclagan
Jamal

Bill Maclagan

Soraya Jamal

In January 2016, the Canada Revenue Agency (CRA) released new statistics relating to Canada's voluntary disclosure programme (VDP).

The VDP effectively gives taxpayers the opportunity to correct past Canadian tax reporting and/or payment deficiencies. Taxpayers who make a valid disclosure will have to pay the taxes and interest; however, they will be relieved from further penalties or prosecution. In certain circumstances, the CRA will have the discretion to waive or reduce interest.

The number of voluntary disclosures being made continues to grow, with more than 19,000 disclosures made under the VDP in the 2014-2015 fiscal year (representing a 21% increase in disclosures over the 2013-2014 fiscal year). The CRA reports that the total unreported income from all voluntary disclosures was more than $1.3 billion, representing a 65% year-over-year increase.

The growing importance of the CRA's offshore tax enforcement efforts is evidenced by the amount of unreported income from offshore voluntary disclosures of $780 million, an increase of 157% from the previous year. The increasing number of disclosures and the amount of undeclared disclosures are likely attributable, at least in part, to the CRA's efforts to fight international tax evasion.

One such initiative is the Offshore Tax Informant Programme (OTIP), which is a 'whistleblower programme' that the CRA launched in 2014. The OTIP allows the CRA to provide financial awards for credible tax leads. To be eligible for an award, the information provided must lead to the collection of more than $100,000 of additional federal tax once all rights of objection and appeal have been exhausted. Informants may then receive between 5% and 15% of the federal tax collected. The OTIP has generated momentum, receiving close to 2,000 calls and more than 200 written submissions in its first year of operation, with 110 cases actively being investigated by the CRA.

As a result of the CRA's crackdown on offshore non-compliance coupled with international efforts to share more tax data between countries, taxpayers with Canadian tax deficiencies should consider whether it would be prudent to disclose under the VDP. It should be kept in mind that, to qualify under the VDP, a voluntary disclosure must be initiated before the CRA has contacted the taxpayer with respect to the relevant issue.

Bill Maclagan, QC (bill.maclagan@blakes.com) and Soraya Jamal (soraya.jamal@blakes.com)

Blake, Cassels & Graydon

Tel: +1 604 631 3336 and +1 604 631 3305

Website: www.blakes.com

more across site & shared bottom lb ros

More from across our site

Levine, who served under the Joe Biden administration, led the US’s negotiations on the OECD’s two-pillar solution
The deal to acquire ITR's parent company is expected to complete by the end of May 2025
JBS, the biggest meat company in the world, allegedly used Luxembourgian ‘mailbox companies’ to avoid taxes between 2019 and 2022
Despite the conviction of Jessa Dabalos, the Tax Practitioners’ Board’s investigative work continues with five outstanding PwC scandal probes
Heads of tax need to push their teams forward as strategic business advisers to add value across their organisations, says Sandy Markwick
Scott Bessent reportedly felt undermined by Musk naming Gary Shapley as acting IRS commissioner; in other news, Baker Tilly will combine with a top 15 US firm
The promise of nine years’ tax certainty and a ‘rational and pragmatic’ government process makes APAs a no-brainer, Indian tax advisers tell ITR
Despite garnering significant revenues from multinationals, Italy’s digital services tax presents pressing double taxation issues, say Stefano Simontacchi and Francesco Saverio Scandone of BonelliErede
ITR’s research shows that in-house tax counsel in Asia also feel underserved by their advisers’ international networks
World Tax global head of research Jon Moore tells ITR how his team spots standout submissions, and gives early statistical insights into this year’s entries
Gift this article