July 24, 2012
Steve Buchanan and Line Arseneau
Montreal, Indirect Tax
Montreal, National Tax Centre
Ottawa, National Tax Centre
Quebec has released an information bulletin that updates its policy on voluntary disclosures. In the eight-page bulletin, ADM 4/R3, "Voluntary Disclosures", Quebec confirms some policies already in practice and updates several procedures, including requiring all disclosure applications to be filed in writing, allowing second disclosures in certain circumstances and changing its assessing practice for QST wash transactions, among others.
Initiating a disclosure
Quebec now requires all applications for a voluntary disclosure to be written and filed by mail or fax (e-mail is not allowed). Previously, discussions and phone exchanges were common in initiating a disclosure.
According to the bulletin, it may now be possible to file a second disclosure if Quebec concludes that:
- The circumstances of a second disclosure are beyond the taxpayer's control
- The omissions, acts of tax evasion and incomplete or inaccurate statements divulged in the first disclosure cannot be considered gross negligence or a repeat of the omissions, tax evasion or incomplete or inaccurate statements reported.
Quebec will now assess QST on a wash transaction that should have been collected by the supplier, and may waive the penalties and interest that would otherwise be payable as at the date on which a notice of assessment was sent. Any amount that remains unpaid as at the date on which the notice of assessment was sent will bear interest at the prescribed rate until payment is received in full. Previously, Quebec did not assess QST on wash transactions in a voluntary disclosure.
The bulletin provides a new example of when a wash transaction may occur. Specifically, there may be a wash transaction when the wrong member of a closely related group or of a group of associated persons (all of which carry on commercial activities exclusively) collects and reports the tax or claims an input tax refund.
Quebec has restricted the time extension allowed for a taxpayer that makes an anonymous disclosure to reveal his or her identity. An extension beyond the usual 90-day period from when a file is opened cannot exceed 30 days (previously it had to be "reasonable").
When a voluntary disclosure cannot be made
The bulletin provides guidance and examples on when Quebec's voluntary disclosure policy does not apply, such as where:
- Only the most recent income tax return or the most recent remittance for which the statutory filing deadline has expired by the date the voluntary disclosure file is opened
- No additional taxes will result, only refunds
- Late, amended or revoked elections are involved
- Relief measures may apply under the QRA's tax fairness measures.
The bulletin updates the address where a voluntary disclosure must be sent. The address is now:
Direction des divulgations volontaires
For more information, contact your KPMG adviser.