Voluntarily Disclose Non-Compliance with Canada’s Tax Laws
Relief from Financial Penalties and Interest
Relief from Criminal Investigation & Prosecution
Voluntarily Disclose Non-Compliance with Canada’s Tax Laws
Relief from Financial Penalties and Interest
Relief from Criminal Investigation & Prosecution
The Voluntary Disclosures Program (VDP) is a government program administered by the Canada Revenue Agency (CRA) and designed to help individuals and businesses come forward voluntarily to correct errors, omissions, or non-compliance with Canada’s tax laws. It provides taxpayers with an opportunity to fix their tax affairs while potentially benefiting from reduced penalties/interest and avoiding criminal prosecution.
If you’ve made some mistakes on your past tax returns, or failed to file them, the Voluntary Disclosures Program is your path to peace of mind.
The Canada Revenue Agency (CRA) introduced significant changes to the Voluntary Disclosures Program (VDP) effective October 1, 2025.
The revised framework expands access to the program, increases interest relief for many taxpayers, and simplifies the criteria used to determine the level of relief available.
The updated VDP adopts a more flexible approach to eligibility. Under the previous rules, certain CRA communications could prevent a taxpayer from making a voluntary disclosure. Under the revised program, receiving a general educational or compliance letter from the CRA will not automatically disqualify an applicant.
However, the VDP remains unavailable where the CRA has already initiated an audit, enforcement action, or investigation relating to the issue being disclosed.
The former General Program and Limited Program have been replaced with two new categories:
“Non-Prompted” Relief generally applies where a taxpayer comes forward before the CRA has identified the non-compliance. Successful applicants may receive:
100% relief from penalties;
75% relief from applicable interest; and
Protection from criminal prosecution for the matters disclosed.
“Prompted” Partial Relief generally applies where the disclosure is prompted by prior CRA contact but the taxpayer remains eligible for the VDP. Applicants may receive:
Up to 100% relief from penalties, depending on the circumstances;
25% relief from applicable interest; and
Protection from criminal prosecution for the matters disclosed.
This new framework is intended to provide meaningful relief even where a taxpayer has had some contact with the CRA, while reserving the greatest benefits for taxpayers who voluntarily disclose non-compliance before being identified.
One of the most notable improvements is the increase in interest relief available under the program. Under the previous General Program, interest relief was generally limited to 50%. The revised General Relief stream increases this to 75%, while the new Partial Relief stream provides 25% interest relief.
The CRA has also clarified the documentation generally expected to accompany a disclosure involving multiple taxation years:
Foreign-source income or assets: generally the most recent 10 years;
Canadian-source income or assets: generally the most recent 6 years; and
GST/HST matters: generally the most recent 4 years.
The CRA may request additional information where necessary to review an application.
Updated administrative guidance and a revised Form RC199 are intended to simplify the disclosure process and provide greater certainty regarding eligibility and available relief.
The revised VDP is generally more taxpayer-friendly than the previous framework. By broadening eligibility, increasing interest relief, and simplifying the relief structure, the CRA has made the program more accessible for taxpayers seeking to correct past non-compliance.
Taxpayers considering a voluntary disclosure should act promptly. Once the CRA has commenced an audit or investigation into the relevant matter, access to the VDP may no longer be available.
1. Reduce Penalties/Interest: By disclosing your errors voluntarily, you may be eligible for reduced penalties and interest, potentially saving you significant amounts of money;
2. Avoid Criminal Prosecution: Participating in the VDP can protect you from criminal charges related to tax evasion; and
3. Peace of Mind: Correcting your tax affairs through the VDP offers peace of mind, knowing that you are in compliance with Canadian tax laws.
The VDP is open to a wide range of individuals and businesses, including:
1. Individuals: If you have unreported income, undisclosed foreign assets, or other tax-related issues, the VDP can help you correct your tax situation;
2. Corporations: Businesses can use the VDP to rectify corporate tax errors, unreported income, GST/HST mistakes or other tax issues; and
3. Estates and Trusts: Executors and trustees can take advantage of the program to resolve estate or trust-related tax matters.
To qualify for a VDP, there are several conditions that you must meet:
1. Voluntary: This means that the CRA has not initiated and audit or investigation;
2. Complete: You must disclose all tax non-compliance for the disclosure to be considered valid;
3. Penalty: The information you are disclosing must trigger a penalty;
4. One Year Past Due: The disclosure must be related to tax years further back than one year; and
5. Payment: You must make a payment for the estimated amount of your disclosure or enter into a payment plan with CRA.
Take the first step towards compliance and peace of mind. Our team of Tax Lawyers is ready to assist you with navigating the Voluntary Disclosures Program.