2018-04-26 10:55:53 Taxes English Learn what a fiscal pardon is and how it helps people and small businesses with back taxes to report them. Also, find out about the... https://quickbooks.intuit.com/ca/resources/ca_qrc/uploads/2018/04/Accountant-Explaining-Fiscal-Pardon-Listener.jpg https://quickbooks.intuit.com/ca/resources/taxes/fiscal-pardon-definition-explanation/ What Is a "Fiscal Pardon"?

What Is a Fiscal Pardon?

2 min read

If you or your small business owes back taxes and you want a way to resolve the situation, you may want to learn more about fiscal pardons, also known as a tax amnesty program, tax pardon, or voluntary disclosure. This type of amnesty lets people with unpaid, unfiled, or unreported taxes from previous years make things right. Through a fiscal pardon, the Canada Revenue Agency (CRA) gives individuals and corporations a chance to pay unreported and under-reported income or GST and submit unfiled returns from previous years without fear of large fines or criminal penalties.

How Fiscal Pardons Work

Part of the CRA’s Voluntary Disclosures Program (VDP), a fiscal pardon allows taxpayers to voluntarily come forward and pay back taxes. In exchange, the CRA waives any tax penalties and often lowers the interest rates it normally charges. To take advantage of this tax pardon program, though, you must apply for it. Almost anyone can file for a fiscal pardon, but if the CRA has a pending prosecution against you, you’re ineligible for relief from the VDP.

Help With Tax Pardons

When you need help filing for a fiscal pardon, you may want to ues a tax lawyer and not a tax accountant. The CRA considers the information you share with your accountant non-privileged communication, so it can compel them to testify against you. The CRA can also seize and use your accountant’s records as evidence against you in a criminal trial if it decides to prosecute.

Tips for Successful Fiscal Pardons

If you decide to use the VDP option to settle up your tax debt with a fiscal pardon, you can do some things that boost your chances for success. These include:

  • Filling out your application carefully. The CRA rejects many applications due to incomplete information.
  • Getting it right the first time. You only get one pardon, and the CRA expects you to maintain tax compliance and file future returns on time.

Most small businesses have many expenses during their first year or two, including tax payments. While making these tax payments proves essential, if you happen to get behind, a fiscal pardon via the VDP gives you a chance to make amends. Even with minor setbacks such as this, your business can thrive within its first few years if you secure a tax pardon. Paying your back taxes as soon as possible with a fiscal pardon helps ensure your company remains in good standing with the government. When filing for a fiscal pardon or in the future, QuickBooks Online can help you maximize your tax deductions. Keep more of what you earn today.

Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

Related Articles

Tax brackets: How to prepare and file your Canadian small business taxes

If you’re an unincorporated small business owner or are self-employed, it’s time…

Read more

What is a Reporting Cycle?

Cycles do not just dictate the flow of seasons, the recycling process,…

Read more

Compliance Requirements and Non Profit Accounting in Canada

Are you considering the addition of nonprofit bookkeeping to your firm’s list…

Read more