Switzerland gets all the good press. Chocolate, health care to rival ours, and, of course, its reputation as tax haven central.
There has been much written in the press recently about the US and Canadian governments trying to get information about people holding money in offshore tax havens. The Canada Revenue Agency has been successful in forcing banks in jurisdictions with strong privacy legislation to give out such information about their depositors. This has resulted in many people stepping forward and voluntarily disclosing previously unreported income to the CRA.
If you own a small business but don’t have a Swiss bank account … trust me, you’ll want to keep reading. Most small business people don’t have money in offshore accounts. But there are a number of other situations where it may be appropriate to take advantage of the CRA’s Voluntary Disclosures Program.
It’s usually a simple situation. Maybe you didn’t file a corporate income tax or HST return. Maybe you work in an industry where you’re paid in cash, and the money hasn’t previously been reported on the tax returns.
Whatever the reason, if you find yourself in a situation where you haven’t completed all required returns, or if you are aware that there are errors in returns you previously submitted, the voluntary disclosure program may be helpful.
Here’s the advantage: if the CRA accepts the disclosure as voluntary, all penalties and possibly some interest will be waived for up to 10 years of delinquent returns. There are big savings to be had because penalties for undisclosed income can be stiff.
In order to be eligible for the program, your disclosure must meet the following conditions:
- The mistake must involve the application of a penalty
- Include information that is at least one year past due
- It has to be voluntary. Seems logical…but it means you can’t be aware of any collection action by the CRA before you come forward
- You must provide full and accurate facts for all the taxation years where there has been inaccurate, incomplete or unreported information. If you don’t tell the truth, the whole truth and nothing but the truth, and the CRA finds out, the disclosure becomes invalid.
At Silver+Goren we like to explore all possibilities to help make the most of your wealth and your business. This route is not part of normal year end tax planning—but it can be a valuable tool, that saves you cash as well. Without involving the Swiss.