The CRA's new Voluntary Disclosures Program ("VDP") Information Circular IC 00-1R6 ("IC") applies as of March 1, 2018. To ensure they're giving the correct advice, tax advisors need to appreciate the changes being made to the disclosure process - particularly at the commencement stage. Much has been written about the significant changes and this article will not review matters such as the distinction between the general and limited programs. Instead, the comments below focus on some mechanical issues.

Pre-Disclosure Discussion

While the no-names disclosure regime has been eliminated, preliminary discussions with a CRA official on an anonymous basis are possible to facilitate "a better understanding of the risks involved in remaining non-compliant, and the relief available under the VDP". Presumably experienced professional advisors will not require that kind of discussion.

The IC also states that "[f]or complex technical reporting issues or questions, taxpayers will be referred to a CRA official in a specialized audit area to discuss their situation on an anonymous basis." The concept of seeking CRA advice on a filing position for a disclosure is not new. The 2015 version of the CRA's internal VDP manual similarly included the following:

"[r]epresentatives should be aware that the onus is on them to provide a complete and accurate disclosure. They are responsible for conducting their own research, obtaining any rulings, and speaking to the appropriate CRA areas of expertise in order to obtain any necessary advice regarding their filing obligations or to answer their technical questions."

In past practice, VDP officers would not make any referrals to particular CRA experts. What may be new (hopefully), based on the wording of the IC, is the direct connection of taxpayers/advisors with specialized CRA officers. As I previously wrote, it remains to be seen how efficient the referral process will be and it may be both protracted and risky, because the taxpayer would remain unprotected outside the VDP process while technical advice is sought.

Based on discussions at the 2017 Canadian Tax Foundation Conference "Administration and Enforcement" Panel, it appears the question of the number of years to disclose in the absence of complete records may be addressed by a CRA officer on a no-names basis. Practitioners may wish to seek this advice in the months after the March, 2018 transition in view of para. 32 of the IC, which states that "[i]n cases where books and records no longer exist, the taxpayer should make all reasonable efforts to estimate the income for those years." While the CRA may take the position that initial advice is non-binding, as a practice point practitioners will likely want to document their initial discussions and obtain the advising CRA officer's name and agent ID.

Effective Date of Disclosure

The IC confirms that pre-disclosure discussions do not constitute acceptance into the VDP and thus do not create an effective date of disclosure ("EDD"). An EDD is generated only once the CRA receives a completed application that meets the five criteria for relief.

Extensions of Time

Practitioners are familiar with long-established VDP practice of granting extensions of time to complete disclosures, including the requirement that the taxpayer's name be disclosed to obtain an extension for a disclosure commenced on a no-names basis. Under the new regime, however, extensions of time will be treated very differently. According to the IC, a complete disclosure is required at the time of filing. Partial information with a request for further time will not be acceptable.

Where the CRA requests further information or documents to verify that a submitted disclosure is complete, up to 90 days may be granted to fulfill the CRA request. If the CRA requests information and 90 days is insufficient, due to complexity or extraordinary circumstances, that period may be extended if a written request is sent. It is highly unlikely the CRA would be amenable to granting further time as a result of, for example, challenges associated with obtaining documents or information. Practitioners should therefore plan to file complete disclosures from the outset and avoid referencing extensions when advising clients.

Reviewing Outcomes

Recently, and in the lead-up to the transition to the new VDP, we have noticed instances where reassessments issued pursuant to disclosures mistakenly include penalties. Oddly, those penalties are described in accompanying documents as having been reduced under the taxpayer relief provisions. Though this is merely anecdotal, the timing for these repeated errors is puzzling. Given that the VDP will have more than one type of stream for relief, each with markedly divergent outcomes, reassessments should be checked carefully to ensure they accord with expectations.