Line 362 – Volunteer firefighters’ amount and Line 395 – Search and rescue volunteers’ amount

Understanding the Voluntary Disclosures Program (VDP)

The Voluntary Disclosures Program (VDP) is a Canada Revenue Agency (CRA) initiative that gives individuals and businesses the opportunity to correct inaccurate or previously unreported tax information. Through this program, taxpayers may revise past returns without facing prosecution or penalties, and in some cases, they may be granted partial relief from interest charges if their submission is approved.

To be considered a valid disclosure, the submission must meet four essential criteria:

• Voluntary: The application must be submitted before the CRA initiates any compliance action such as an audit or review of your records.
• Complete: All relevant and accurate details must be provided for the reporting period in question.
• Penalty Involvement: The scenario must involve a situation where a penalty could apply, typically when taxes are owed.
• Past Due: The information being disclosed must be at least one year overdue.

Is It Worth Applying?

At first glance, the VDP appears to offer a practical solution for individuals who need to resolve tax issues from previous years. It was designed to encourage compliance by offering a more forgiving approach for those who voluntarily come forward.

However, there are important nuances that applicants need to be aware of. A common misunderstanding is that applying through the VDP guarantees immunity from all penalties and interest. While the CRA outlines that valid disclosures can be exempt from penalties and prosecution, it also notes that granting relief is at the discretion of the Minister. Each application is assessed individually, and relief may be fully approved, partially approved, or denied. If a request is not accepted in full, the CRA will explain the reasoning behind the decision.

The decision to reduce or waive penalties and interest is ultimately made based on the circumstances of each case, often by the CRA official handling the file.

Could This Information Be Used Against You?

A frequent concern about the VDP is whether the CRA can act on the information if the disclosure is rejected.

Unfortunately, yes. If the CRA declines your application, the details you provided may still be used in the following ways:

• The disclosed information may be passed along to other CRA departments.
• It could result in new assessments.
• The CRA may apply interest charges and penalties based on the content of your disclosure.
• In more serious cases, the information might even lead to investigations or legal action.

Advice Before Proceeding

Before submitting anything through the VDP, it’s important to get professional guidance. Understanding all aspects of the program and how they apply to your situation can help you avoid unexpected outcomes and ensure you’re making an informed decision.