VDP questions

Tax Topics
1

  1. Is the sale of a principal residence that was not reported eligible for the VDP?

  2. If a non-resident landlord failed to remit Part XIII tax on rental income, is this eligible for the VDP? If eligible, I guess I should the NR4 return be filed with the application?

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With regards to VDP for principle residence, my guess would be a no. The failure to report a principal residence disposition isn’t on the criteria within the VDP eligibility condition because it is typically considered a late election issue, rather than unreported taxable income. Remember that VDP is meant to correct errors or omissions that create tax non-compliance (e.g., unreported income, failure to file returns, etc). The CRA also does not accept VDP applications where the disclosure is primarily to make or alter an election under tax legislation.

I dealt with a case where the taxpayer’s previous accountant fill up T2091 so what my firm did was we wrote a letter explaining how the client did not know that this was a mandatory requirement and that once they did, they made the decision to hire another accounting firm and send in the form. Luckily the agent handling the file was understanding so there wasn’t any fees, but it’s more of situational.

With regards to the NR4, you can file for the VDP application. With the applcation you’d need to include all relevant information and documentation for the affected reporting periods. Those include the T1159, NR4 slips, and calculation of withholding and arrears. With this one, I’d be incredibly cautious with having to take on a case like this. It shouldn’t be considered as an easy task to resolve, plus it may cause potential liability not only to you but your client. I had done this for only one of my non-resident clients and it took 2 YEARS for the CRA to get back to use on our application. By then the taxpayer had died from covid.

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1.Yes, the sale of a principal residence that was not reported to the Canada Revenue Agency (CRA) is generally eligible for the Voluntary Disclosures Program (VDP).

2. Non-residents must pay tax by instalments if their net tax owing for 2026 (or 2025/2024) is more than $3,000 ($1,800 for Quebec residents).