How Our Client Reduced a $488,000 Tax Liability  

When it comes to taxes, even the most diligent individuals can find themselves in complicated situations—especially when failing to file business income in a sole proprietorship for several years. One of our clients recently faced this challenge – this is how we managed it. 

The Situation 

The client, based in the GTA, had accumulated several years of profit in a business with a sole proprietor structure. Between the years 2015 and 2023, for a variety of personal and business reasons, the client failed to file his personal income taxes.  When we were engaged, we promptly reminded the taxpayer that it wasn’t only income tax that was owed, but the related Sales Tax (HST) from the first year that he made $30,000…which happened to be the first year of business in 2015. After reviewing their file, the numbers were sobering: over $228,000 in unpaid income taxes, over $92,000 in unpaid HST/GST and with interest and penalties, the total exposure climbed to around $488,000. 

Our Approach 

Our team: 

  • Reconstructed the client’s net income and related HST/GST liability using information provided by the client for the years 2015 through to, and including 2023 

  • Recommended applying to the Canada Revenue Agency’s Voluntary Disclosures Program (VDP)—a powerful tool that can eliminate penalties and reduce interest for taxpayers who come forward voluntarily.  Unfortunately, with the delays in the process, the CRA requested tax returns and GST/HST returns before we were able to make the application. 

  • We used the regular process of filing the Income Tax returns and the GST/HST returns resulting in a total liability of $488,000 for all of the years, including Interest and Penalties. 

  • Decided to make a Taxpayer Relief Request – Cancel or Waive Penalties and Interest – which could result in savings ranging from $0 to $108,000 

The Outcome 

Because we were unable to use the VDP process, we had to rely on the Taxpayer Relief Request – Cancel or Waive Penalties and Interest.  We, along with the client, wrote a compelling application and case for relief – and we were successful.  The estimated liability dropped to around $380,000—a savings of nearly $108,000 in penalties and interest.  

Key Takeaways 

  • Don’t wait. If you suspect something was missed in a past return, taking action can make a big difference. 

  • The Taxpayer Relief Request – Cancel or Waive Penalties and Interest works. Sometimes you can’t use the VDP Process to try to protect yourself from Penalties, but the Application for Relief of Interest and Penalties works.  You really have nothing to lose other than some fees paid to your accountant or lawyer. 

  • Expert help matters. Navigating complex tax rules and timelines and understanding your options are crucial in getting a favourable outcome. 

If you’re unsure about your tax situation—especially if you have failed to file in quite some time — reach out. We’re here to help you move forward with confidence. 


Stephen Aubert CPA