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GST — voluntary disclosure accepted

My client was a construction company. It had failed to file GST returns and remit GST net tax of some $210,000 over a four-year period. Overall, its accounting records were not in good shape. An employee who had partial responsibility for these records proposed to the company's owner that she be appointed Controller, and clean up the records, including filing the overdue GST returns.

The individual was appointed Controller, and started this process. She met with the company's external Chartered Accountants and asked them to prepare the GST returns. The accountants prepared the returns and sent them to the company's President to be signed and filed.

Coincidentally, the day before the accountants forwarded the returns to her attention, the Controller received a voicemail from a CRA official, inquiring about the fact that the company had not filed GST returns. However, she was away on vacation that week and did not hear the voicemail until the following week.

The President signed the returns and filed them with the CRA.

The CRA assessed penalties on the unremitted balances. The company asked me for help, as it qualified to have the penalties cancelled under the "Voluntary Disclosure" policy.

As I explained to the company, we had an uphill battle. The CRA's inquiry requesting that returns be filed came before the returns were filed, so the CRA's presumption would be that the filings did not qualify as "voluntary". I had to show that the decision to file the returns had nothing to do with the (unheard) call to the Controller.

I submitted a letter to the CRA's local Voluntary Disclosure Officer, and provided documentary evidence of the sequence of events. I included Affidavits sworn by the various individuals involved, including the Controller, the company's President, and the external chartered accountant. These Affidavits, as sworn testimony, carried significant weight.

The Voluntary Disclosure Officer agreed, and cancelled tens of thousands of dollars of penalties.

(2004)