Appointed as an executor or estate trustee by a Will? If the deceased had tax issues on death, it can be problematic for you and expose you to liability claims by the beneficiaries.

The CRA has a Voluntary Disclosure Program, which not only will help you, as executor, but increase the chance that the unpaid taxes are actually paid to the government in a timely way. The Program is not limited to executors, but can be a very helpful option.

The Program is supposed to encourage voluntarily disclosure of problems or errors in previous tax filings, without the imposition of penalties or interest such as, for example, on late payments to the CRA. The federal legislation also indicates that the CRA has the ability to waive interest on tax assessments for a ten-year period.

You can make the voluntary disclosure on a no-name basis. However, the CRA cannot enter into any agreement with someone anonymously, so disclosure of a name or identity will likely be required. There are specific periods of time, if voluntary disclosure is made, to submit any materials you rely on to request the waiver of interest or penalties by the CRA.

There are, of course, conditions. For example:

1.            There must be voluntary disclosure (i.e., made before the CRA takes steps to collect);

2.            A penalty would otherwise be imposed by the CRA on the liability;

3.            You have to make full and complete disclosure (i.e., honest disclosure); and

4.            The problem you identify must be at least past due for one (1) year.

Before you consider the Program, you should consult with a qualified chartered accountant, of course. There can be pitfalls and risks involved, so you should ensure to obtain proper advice before considering the Program. You should also obtain legal advice, too.

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