When do you Need to do a Voluntary Disclosure?
WHY DO PEOPLE BOTHER WITH A VOLUNTARY DISCLOSURE? I WON’T GET CAUGHT AFTER ALL THIS TIME…
We encounter many different reasons why tax payers finally make the decision to do a Voluntary Disclosure and have their tax affairs corrected.
A guilty conscience can impact a person’s life so significantly that it can cause disruption to sleep, panic attacks, depression, drug & alcohol abuse, etc. There are many taxpayers who would possibly never get discovered by CRA but ultimately decide to do a VDP to have a clear conscience. It can be draining to worry and stress about your tax problems. Coming clean with the VDP is a way to stop the worrying. It’s a way to fix what has been done and move forward with your life.
Fear can be a very strong motivator for change. Imagine being afraid that CRA is calling every time your phone rings. Or avoiding getting the mail in case that brown envelope you have been dreading has finally arrived. This is no way to live your life. Many taxpayers decide to file a Voluntary Disclosure so that they can know that they are on side with CRA and don’t need to live with the skeletons in their closet.
Whenever a business is audited, the auditor will often ask for a list of all the consultant and sub-contractor names, social insurance numbers, and addresses. Then the auditor will compare the expense claimed in the business to the income reported by the consultant or sub-contractor. So while you may not think that you will be caught, the other side of your transaction might be and that can lead back to you.
People don’t want to hurt the ones they love. When taxpayers realize that their actions could destroy their family, they are often anxious to make amends and remove any threat that may exist against their family. Sometimes a taxpayer realizes that their actions could cause them to lose their house. Others realize that if caught they will leave their spouse with nothing in retirement. Others find that their children cannot get OSAP because they have no Notice of Assessment to support their income. And others are newlyweds that cannot get a mortgage because they too have no Notice of Assessment to present to the bank.
Sometimes taxpayers decide to correct or file their returns in order to be able to move forward with their business plans for the future. For a taxpayer with a thriving business, how could you ever sell it without any financial statements or tax returns to show a potential buyer? How can you borrow money from the bank without any statements to present? How can you grow and start having advertisements when one quick search by CRA would unravel everything? Sometimes you just need to deal with the past so that you can move forward with the future.
High Chance of Getting Caught
Some taxpayers would never file a Voluntary Disclosure but now the time has come that if the VDP is not filed, the CRA will likely contact the taxpayer and penalties, and possibly criminal charges will apply. We have seen taxpayers come in who have had their entire office contacted by CRA and want to get their VDP in before they too are contacted. We have seen this with commission employees, waitresses, police officers, real estate agents, and more.