I can do little better than to encourage you to read this Globe & Mail piece from my former colleague Steve Novoselac discussing voluntary disclosures to CRA.
The Voluntary Disclosures Program allows you to disclose to CRA any errors or (more often) omissions in prior years’ tax returns–such as undeclared income–while avoiding penalties and reducing the interest burden on those omissions. You pay your taxes owing on the omissions for a certain number of years; and then you are in the clear.
As Steve says, as soon as CRA begins to take enforcement action (such as an audit) against you that it considers would have found the omissions, they will no longer a voluntary disclosure. I always recommend to people who are considering coming forward about tax omissions to do it today. Make the call; pay me a visit. That’s because a tax lawyer can really help here: we can even make a “no-names” disclosure on your behalf, stopping any potential clock on enforcement action and the penalties that would result, while you review with your accountants how much coming clean would cost. In the meantime, you get the benefit of the disclosure if you need it or want it, but CRA doesn’t learn your name or identifying details.
Canada has a number of offshore information exchange agreements with former offshore havens, and international information exchange is growing. Whistleblowers have been very active both in Canada and internationally, some using CRA’s information-buying programs to earn money for turning in those who are avoiding tax. You’ll sleep better, for good.