Canada: Canadian voluntary disclosure programme rises in popularity

International Tax Review is part of Legal Benchmarking Limited, 1-2 Paris Garden, London, SE1 8ND

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

Canadian Prime Minister Mark Carney and US President Donald Trump have agreed that the countries will look to conclude a deal by July 21, 2025
The firm’s lack of transparency regarding its tax leaks scandal should see the ban extended beyond June 30, senators Deborah O’Neill and Barbara Pocock tell ITR
Despite posing significant administrative hurdles, digital services taxes remain ‘the best way forward’ for emerging economies, says Neil Kelley, COO of Ascoria
A ‘joint understanding’ among G7 countries that ‘defends American interests’ is set to be announced, Scott Bessent claimed
The ‘big four’ firm’s inaugural annual report unveiled a sharp drop in profits for 2024; in other news, Baker McKenzie and Perkins Coie expanded their US tax benches
Representatives from the two countries focused on TP as they met this week to evaluate progress under a previously signed agreement – it is understood
The UK accountancy firm’s transfer pricing lead tells ITR about his expat lifestyle, taking risks, and what makes tax cool
Dolphin Drilling intends to discuss the final liability amount and manner of settlement with HM Revenue and Customs
Winning the case against the 20% VAT imposition was always going to be an uphill challenge for the claimants, UK tax advisers argue
A ‘paradigm shift’ in Chile’s tax enforcement requires compliance architecture built on proactive governance, strategic documentation and active monitoring of judicial developments
Gift this article