An accounting colleague asked recently how the “one year overdue rule” applies for a voluntary disclosure for 2019. The rule is found in paragraph 37 of Information Circular IC00-1R6 (“Voluntary Disclosures Program”), which reads as follows:
- The VDP application must include information that relates to a taxation year that is at least one year past the due date for filing. The program is not meant to be used as a de facto filing extension. However, an application that includes information that relates to a taxation year that is more than one year past due and information that is more recent may be considered.
For 2019, as part of its COVID relief efforts, the CRA extended the time for filing to September 30, 2020, but it did so by stating that it would not charge interest or penalties for filing and paying by that date. The Income Tax Act (Canada) was not amended to extend the ordinary April 30 deadline. It appears the CRA implemented this “change” by relying on its ability under the relief provisions of the Act to cancel penalties and waive interest. These are the same provisions that make the VD program possible.
The question is whether “due date” in paragraph 37 of the IC refers to the deadline found in the Act (which wasn’t changed) or as implemented by the CRA through its administrative practice. As far as I can tell, the CRA has not published a position. I counselled my accounting colleague that, to be on the safe side—and to stay within the spirit of the rule—she should assume that the “due date” for VDP purposes is the CRA’s administrative date for 2019 (ie September 30, 2020). This means that a taxpayer should not make a voluntary disclosure for 2019 until after September, 2021.
My accounting colleague called the CRA to ask this question, and the CRA agent, after consulting with a team leader, provided the same response.
