CRA Voluntary Disclosures Program (VDP): What’s Changed and Why It Matters
Mistakes in tax filings are more common than many people realize. Unreported income, missed filings, or reporting errors can accumulate quietly over time until they become a source of real concern. When taxpayers identify an issue before the Canada Revenue Agency (CRA) does, the Voluntary Disclosures Program (VDP) can provide a structured way to correct past non-compliance while limiting penalties and interest.
Effective October 1, 2025, the CRA introduced important changes to the VDP that make the program more accessible and flexible, while still emphasizing the need for complete and well-prepared disclosures.
What Is the Voluntary Disclosures Program?
The VDP allows taxpayers to voluntarily correct inaccurate, incomplete, or unfiled tax information from prior years. When a disclosure is accepted, the CRA may cancel penalties and provide partial interest relief that would otherwise apply. The intent of the program is to encourage taxpayers to come forward before enforcement action is taken.
Relief under the VDP is discretionary, and acceptance depends heavily on how and when the disclosure is made.
What Changed on October 1, 2025?
The CRA replaced the previous General and Limited relief categories with a simplified two-tier framework:
- Unprompted disclosures, where the CRA has not identified the specific non-compliance issue, and
- Prompted disclosures, where some CRA contact has occurred but enforcement action has not yet begun.
Under the updated program:
- Unprompted disclosures may qualify for full penalty relief and significant interest relief.
- Prompted disclosures may still receive full penalty relief, with more limited interest relief.
The definition of what qualifies as “voluntary” has also been broadened. Certain CRA communications, such as educational or outreach letters, no longer automatically disqualify a taxpayer from accessing the VDP.
The application process itself has been streamlined through a revised Form RC199, with clearer guidance on required information and supporting documentation.
Who Is Eligible?
To be considered under the updated VDP, a disclosure must generally meet the following conditions:
- The disclosure must be voluntary and made before enforcement action begins.
- It must be complete, covering all relevant years and issues.
- The issue must involve potential penalties or interest.
- The information must typically be at least one year past due.
- The application must include payment of the estimated taxes owning
The program applies to individuals, corporations, trusts, payroll accounts, and GST/HST registrants, including more complex matters such as foreign income and trust reporting.
Why You Should Reach Out to Our Office
The VDP is not simply a form-filing exercise, it is a strategic decision that can materially affect the outcome. The way a disclosure is framed, the timing of submission, and the supporting documentation all influence whether relief is granted and to what extent.
Our office assists clients by:
- Evaluating whether a voluntary disclosure is appropriate under the new rules
- Identifying potential exposure and available relief
- Preparing complete and well-supported submissions
- Managing CRA correspondence throughout the process
If you are concerned about a past tax issue or want clarity before it escalates, seeking advice early is critical. Proactive action can reduce penalties, limit interest, and provide peace of mind moving forward.