Jan 19, 2022
As we advised in Tax Tip 20-04 , significant additional disclosure and filing requirements for trusts were announced in the 2018 Federal Budget and are scheduled to apply for trust’s 2021 and subsequent tax years.
“There is a 90-day limit to disclose the taxpayer’s name.”
The CRA recently clarified its policy on no-name voluntary disclosures in a press release dated October 1, 2005. In general, a voluntary disclosure can be made on the basis of identifying the taxpayer or on a no-names basis. Where a taxpayer is identified immediately, then they are protected from any subsequent investigations or contact by the CRA. On a no-names basis, however, some advisors were unclear as to whether there was this protection from penalties when the name had not been given. The CRA has clarified its policy. The taxpayer is protected on a no-names basis for 90 days from the time the initial submission has been made. Essentially, the initial date for the voluntary disclosure on a no-names basis is either the date of receipt by a CRA Tax Services Office of a written voluntary disclosure submission or the receipt of a completed taxpayer agreement form (VDP-1).
This means that once CRA has made an official recording of the no-names voluntary disclosure, then there is a 90-day limit within which the name of the taxpayer must be given. If the name of the taxpayer is not given within this 90-day period, then the voluntary disclosure file is closed and the taxpayer is no longer protected from penalties or investigation.
A no-names voluntary disclosure is a powerful tool that taxpayers should use when applicable. However, a taxpayer and/or his advisor cannot use this on a perpetual basis. Instead, there are 90 days within which to complete a voluntary disclosure and submit all relevant information.
TAX TIP OF THE WEEK is provided as a free service to clients and friends of the Tax Specialist Group member firms. The Tax Specialist Group is a national affiliation of firms who specialize in providing tax consulting services to other professionals, businesses and high net worth individuals on Canadian and international tax matters and tax disputes.
The material provided in Tax Tip of the Week is believed to be accurate and reliable as of the date it is written. Tax laws are complex and are subject to frequent change. Professional advice should always be sought before implementing any tax planning arrangements. Neither the Tax Specialist Group nor any member firm can accept any liability for the tax consequences that may result from acting based on the contents hereof.
TAX TIP is provided as a free service to clients and friends of Cadesky Tax.
The material provided in Tax Tip is believed to be accurate and reliable as of the date of posting. Tax laws are complex and are subject to frequent change. Professional advice should always be sought before implementing any tax planning arrangements. Cadesky Tax cannot accept any liability for the tax consequences that may result from acting based on the contents hereof.