The CRA Voluntary Disclosure Program grants relief to taxpayers who voluntarily omitted or made an error on their tax returns. In the program, taxpayers can
Resolving Tax Compliance Issues with SDG Accountants
In the intricate world of tax compliance, individuals can often find themselves unknowingly entangled in complex regulations. This case study presents a detailed account of how SDG Accountants assisted one of our clients, an individual taxpayer, in leveraging the CRA Voluntary Disclosure Program (VDP) to address critical tax compliance issues.
The Problem (May 2021):
Our client’s story begins in May 2021, with an inadvertent omission that spanned several years. For the tax years ranging from 2014 to 2019, the client was unaware of the requirement to file a T1135 form to report foreign property held outside of Canada. The revelation of this oversight came to light in 2021 when the client engaged SDG Accountants for tax-related assistance.
Upon closer examination, the client firmly asserted that their failure to disclose the foreign property holdings was not driven by any willful intent to avoid taxation. Instead, it was a genuine oversight. To rectify the situation and comply with the law, the client approached SDG Accountants for guidance.
The Analysis and Resolution:
Navigating the CRA Voluntary Disclosure Program (VDP) requires a systematic approach. Here’s a detailed timeline of the steps taken by SDG Accountants to address the client’s situation comprehensively:
Step 1: Preliminary Assessment (June 2021):
In June 2021, SDG Accountants conducted an initial evaluation to ascertain the client’s eligibility for the VDP. It was determined that the disclosure met key VDP criteria: it was voluntary, pertained to a tax issue (unfiled T1135 forms), and was overdue by at least one year.
Step 2: Gathering Documentation (June – October 2021):
From June to October 2021, the client, with the guidance of SDG Accountants, embarked on the process of assembling all the necessary documentation and information required to complete the T1135 forms accurately. This meticulous task included detailed records of foreign property holdings, financial transactions, and any other relevant data.
Step 3: Calculation of Penalties and Interest (November 2021):
In November 2021, SDG Accountants assisted the client in calculating the potential penalties and interest that might have accrued due to the late filing of the T1135 forms. This step ensured that the client had a clear understanding of the financial implications involved.
Step 4: Filing the Voluntary Disclosure (December 2021):
By December 2021, SDG Accountants had prepared the comprehensive VDP submission and T1135 forms on behalf of the client, ensuring all necessary details and documents were included. The submission emphasized the client’s genuine intent to rectify the oversight and cooperate fully with the Canada Revenue Agency (CRA).
Step 5: Client’s Commitment to Compliance (February 2022):
Throughout February 2022, the client reiterated their commitment to complying with all tax obligations. This commitment strengthened the client’s case for eligibility under the VDP, as it demonstrated a sincere intent to cooperate with tax authorities.
Client Review and Signature (February - March 2022):
In February, a crucial meeting was scheduled with our client, although the client’s busy personal schedule delayed the meeting until March. During this meeting, SDG Accountants presented all the documents for thorough client review. However, the client was confused about some of the figures, prompting another meeting.
We'd love to hear from you!
Need to file Voluntary Disclosure with the Canada Revenue Agency? Discuss your options with us. Book a free 15-minute, no-obligation consultation to get more information about how we can help you with your specific needs.Start My Tax Prep
Clarification and Final Signature (March 2022):
In March 2022, SDG Accountants held a second meeting with the client to clarify the figures and changes in the documentation. Finally, on February 16, 2022, the client was sent the final applications, for signatures to proceed.
Updated Information Submission (March 2022):
Unexpectedly, on March 15, 2022, the client informed SDG Accountants of personal information changes, including a new SIN number and address. SDG Accountants promptly updated these changes in the documents and sent them back to the client on March 22, 2022, with all the necessary details needed to file these documents by mail.
Submission to CRA (April 2022):
On April 4, 2022, all the documents and payments, now including the updated personal information, were mailed to the Canada Revenue Agency (CRA) along with the required supporting documents.
Final Update (October 11, 2023):
On October 11, 2023, our client received a final letter from the Canada Revenue Agency (CRA), confirming the acceptance of their Voluntary Disclosure Program (VDP) application under the General Program. The letter specified the Effective Date of Disclosure as April 28, 2022, and highlighted the information submitted by the client. Importantly, the CRA’s decision included the application of partial interest relief and the waiver of penalties, providing significant financial relief to our client. This marks the successful conclusion of the case, underscoring the importance of timely tax compliance management. SDG Accountants remains committed to helping individuals and businesses achieve tax compliance and financial peace of mind.
The case study of the client’s experience with the Voluntary Disclosure Program underscores the importance of seeking professional assistance when faced with complex tax situations. Through a systematic and diligent approach, SDG Accountants guided the client through the VDP process, allowing them to address their tax compliance issues comprehensively.
At SDG Accountants, we are committed to helping individuals and businesses resolve tax-related challenges. If you find yourself in a similar situation or have any tax-related concerns, we invite you to reach out to us for assistance. You can contact us by phone or email or book a free initial consultation to discuss your specific needs and explore how we can help you achieve tax compliance and peace of mind.
Don’t let tax issues linger—contact SDG Accountants today and let us guide you toward a resolution that ensures your financial affairs are in order. Your peace of mind is our priority, and together, we can navigate the complexities of tax compliance.
The information is not intended to constitute professional advice and may not be appropriate for a specific individual or fact situation. It is written by the author solely in their personal capacity and cannot be attributed to the accounting firm with which they are affiliated. It is not intended to constitute professional advice, and neither the author nor the firm with which the author is associated shall accept any liability in respect of any reliance on the information contained herein. Readers should always consult with their professional advisors in respect of their particular situations.
— Sami Ghaith
CPA, CGA, MBA