How does CRA's Voluntary Disclosures Program work?
CRA's Voluntary Disclosures Program (VDP) lets taxpayers come forward to correct past errors or omissions in their tax filings before CRA initiates contact. If your disclosure meets the program's conditions, you generally pay the taxes owing plus interest but avoid the civil penalties that would otherwise apply, and you are protected from criminal prosecution for the disclosed matters.
To qualify, your disclosure must be voluntary (CRA must not have already contacted you about the issue or begun an audit of the relevant period), complete (you must disclose all relevant information), involve a potential penalty, and relate to information at least one year old. There are two streams: the general program for most disclosures, and a limited program for cases involving intentional non-compliance, where only partial relief from penalties is available.
The VDP is most commonly used for undisclosed foreign income or assets, unreported employment or business income, and unfiled returns. You can make an anonymous preliminary disclosure to explore whether your situation qualifies before committing to a named application. If your application is accepted, you formalize it and pay what is owed. If rejected, you remain exposed to the full consequences of the unreported income.
Key takeaways
- VDP lets you correct past omissions and generally avoid civil penalties by coming forward voluntarily.
- Your disclosure must be voluntary, complete, involve a penalty risk, and relate to information at least a year old.
- Cases of intentional non-compliance have access only to partial relief under the limited program.
- Anonymous preliminary inquiries let you test eligibility before making a formal application.