Filing Previous Year Tax Returns In Canada
How to file prior year tax returns in Canada and everything you need to know about the CRA Voluntary Disclosure Program.
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How to File Your Prior Year Tax Returns
Did you forget to file your tax returns when you were supposed to? Did you intentionally not file? Remember, it is a crime to not file your tax return. Each day that you wait to file your return could mean additional penalties and interest. You could even find yourself subject to prosecution.
Don’t assume that, just because the Canada Revenue Agency (CRA) hasn’t contacted you yet, that they won’t notice that you have outstanding prior year returns. They will not forget about you and will eventually come to collect the money that you owe.
Not filing doesn’t help you and it could cause a lot of trouble for you. This means you will want to know how to file previous year tax returns in Canada.
The first thing you’ll need to know is that filing past tax returns in Canada in possible. However, the process you take will depend on your individual circumstances.
One program that can be helpful for those who wish to file past year tax returns is called the Voluntary Disclosure Program.
About the CRA Voluntary Disclosure Program
The CRA Voluntary Disclosure Program (VDP) is a program that is designed to work as a “second chance.” Through the program, you are able to file past tax returns or correct previous tax returns. If you file your previous year tax returns through the VDP, the CRA may provide relief from penalties and prosecution.
However, there are certain conditions that must apply if you wish you file through the VDP. These include:
- The disclosure must be voluntary
- You must apply for the VDP before the CRA contacts you about your previous year tax returns and any outstanding tax debt that is owed. If the CRA has already contacted you or if it has taken any compliance action against you, the VDP does not apply.
- You must include all information
- You need to make sure that all tax returns filed through the Voluntary Disclosure Program are 100% accurate and complete, to the best of your knowledge. You must also disclose all information for all outstanding years. This means, for example, if you have not filed your taxes for the past three years, you must include complete information on all three years in your VDP submission, not just the details of one or two years.
- A penalty must apply
- In order to use the VDP, you must owe money on previous year tax returns, or owe late filing penalties, late remittance penalties, or any other penalties.
- The information must be at least a year overdue
- If your return is not at least a year overdue, then the VDP will not apply in your situation.
- The application must include payment of the estimated taxes owing
- If the taxpayer cannot make payment of the estimated tax owing at the time of the VDP application, a payment arrangement may be requested subject to approval from the CRA.
The VDP is open to all individuals and businesses, whether you are a resident of Canada or not.
If your VDP application is accepted, the CRA may only charge you the amount of tax debt you owe plus interest, waiving penalties and other possible charges. Depending on your situation, this could save you quite a lot of money.
Filing Previous Year Tax Returns if You Do Not Owe Money
If you do not owe money on your taxes, it’s still important that you file. Not only does the law say that you must file a tax return, but you may be entitled to a refund or credit. Plus, certain government programs and benefits will be stopped or delayed unless you file.
If you believe that you do not owe money, but you have not filed your taxes, contact the CRA and let them know.
If You Are Contacted by the CRA About Previous Year Tax Returns
If you have been contacted by the CRA regarding previous tax returns, or if the CRA states that you owe tax debt, you should speak with a tax professional as soon as possible. It can be very time-consuming and difficult to deal with the CRA, and the agency will not be very accommodating if you owe money.
Contact the professionals at Farber Tax Solutions today. Our experts can help you, whether you want to know how to file previous years tax returns with the Canada Revenue Agency, how to handle communication with the CRA, or any other tax issue
Farber Tax Solutions Helps You at Every Step of the Way including:
- 1| Organizing: We analyze all documents and communication, to fight the CRA on your behalf
- 2| Audits: We assist you with audits and ensure proper conduct by tax authorities
- 3| Appeals: We can prepare a Notice of Objection, clarifying your standing with the CRA
- 4| Litigation: We represent you at all levels of court