Voluntary disclosures program (VDP)

The CRA’s IC00-1R7 explains who can apply and how relief is decided. In a sale, the term can come up if a past filing error is found during a buyer’s review. Buyers checking the same ground will find it in the answer on how to check for unpaid taxes.

Conditions

• The application must be voluntary. IC00-1R7 says it is not voluntary if an audit or investigation has been initiated against the taxpayer or a related taxpayer in respect of the information being disclosed
• IC00-1R7 says unprompted applications are normally eligible for general relief, and lists among its conditions that the application includes information for a tax year at least one year past its filing due date
• The CRA notifies its decision in writing, and the circular says the CRA is not required to grant relief for all applications

What to ask

Ask whether the CRA has already contacted the business about the issue, whether an application on Form RC199 was filed, and what the CRA decided. A seller’s adviser can say how a disclosure fits the timing of a sale. The notice of assessment for the affected year shows what the CRA has assessed.