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CRA Releases Guidelines for New GST Voluntary Disclosures

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On December 13, 2017, the CRA released GST/HST Memorandum 16-5 outlining its new GST/HST Voluntary Disclosure Program (“GST/HST VDP”) (IC00-1R6, Voluntary Disclosures Program which was released around that same time outlines the new Income Tax VDP). The new GST/HST VDP is a marked departure from the present VDP that it will replace as of March 1, 2018.

While the old VDP had only one general applicant category, the new GST/HST VDP has three mutually exclusive categories:

  1. Wash Transactions (100% interest relief & 100% penalty relief);
  2. General Program (50% interest relief & 50% penalty relief); and
  3. Limited Program (0% interest relief & only gross negligence penalty relief).


Category 1 – GST/HST Wash Transactions will provide relief for applications involving GST/HST wash transactions that are eligible for a reduction of penalties and interest under GST/HST Memorandum 16-3-1, Reduction of Penalty and Interest in Wash Transaction Situations.


Category 2- General Program will provide relief for applications disclosing “minor” non-compliance or errors including:

  • GST/HST wash transactions not eligible for a reduction of penalty and interest under GST/HST Memorandum 16-3-1;
  • reasonable errors;
  • failure to file information returns;
  • no gross negligence or deliberate avoidance of tax; or
  • over-claimed rebates.


Category 3- Limited Program will provide relief for applications involving most large registrants or those with an element of intentional conduct on the part of the registrant or a closely related party, including where:

  • GST/HST was charged or collected but not remitted;
  • A registrant undertook efforts to avoid detection (e.g. participation in underground economy);
  • disclosure is only made after an official CRA announcement of a specific focus of compliance (e.g. a special project focussing on the underground economy) or following broad-based CRA correspondence (e.g. a standard compliance letter issued to those in a particular sector or industry); or
  • there has been deliberate or wilful default or carelessness amounting to gross negligence.

The CRA has said that large registrants may be processed under the General Program, but that corporations and related entities with gross revenues in excess of $250 million in at least two of the past five years will generally only be able to apply under the Limited Program.

The CRA listed the following additional factors that in all cases may be considered to determine which category a VDP application will be processed under:

  • the dollar amounts involved;
  • the number of years of non-compliance;
  • the sophistication of the registrant; and
  • how quickly the registrant took corrective measures to address their non-compliance upon its discovery.

Unfortunately, the new GST/HST VDP has abandoned the “no-name” disclosures that were permitted under the old VDP and essentially allowed registrants to determine with some certainty whether they would be accepted into the VDP. With the three new categories, the elimination of “no-name disclosures” is quite problematic because as it stands there is seemingly no way for a registrant to determine with any real certainty which one of the new GST/HST VDP categories they would be assessed under. In fact, the CRA has itself indicated that “the determination of whether an application should be processed under category 1, 2 or 3 will be made on a case-by-case basis.” 

Given the uncertainty created by the three new application categories, it is possible that many registrants may ultimately be scared away from the new GST/HST VDP based on the seemingly high likelihood (particularly in the case of large corporations) that they will be processed under the new Limited Program, which has essentially eliminated many of the historical benefits (e.g. greater interest and penalty reductions) of making a voluntary disclosure. 

Are you considering a Voluntary Disclosure? If so contact us here.  

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