Anonymous Pre-Disclosure Talks With the CRA: VDP in Canada

If you have missed income or filed late, the idea of contacting the CRA can feel risky. You may want to ask questions first, before putting your name on anything. The Voluntary Disclosures Program (VDP) has a step designed for exactly that worry.

This article explains what the anonymous discussion is, what it cannot do, and what you still need to sort out before relief is possible. It is general information, not advice on your own file.

This article covers Canadian federal tax law, which applies in every province.

What the anonymous discussion is

The CRA says a person who is unsure about applying may hold preliminary discussions with it on an anonymous basis. These talks are informal and non-binding, and they can be requested through the CRA's online callback form.

In plain words, you can ask how the program might apply to your situation without first handing over your identity. Because the talk is non-binding, neither you nor the CRA is committed to anything by having it.

What it is not

An anonymous discussion is not an application. Relief requires a signed Form RC199 with full documents and payment, and an effective date of disclosure is only assigned once the CRA acknowledges the application.

That matters because the protections people want most come from a valid application, not from a phone conversation. Prosecution protection and relief from gross negligence penalties apply to eligible applicants, for the information they disclose. Until you apply, you do not have that protection.

• It does not start the clock on your relief.
• It does not give you an effective date of disclosure.
• It does not replace the application, the supporting documents or the payment.
• It does not guarantee how the CRA will later decide your application, since the talk is non-binding.

What you still need before relief is possible

Whatever the call tells you, the application itself must meet the program's conditions. It must be voluntary and complete, with all supporting documents. It must involve interest, penalties or both. It must include information at least one year past the filing due date. And it must include payment of the estimated tax owing, or a request for a payment arrangement.

Relief covers penalties and interest, not the tax itself. Tax owing must be paid. If you cannot pay in full, you can ask for a payment arrangement, but approval is not guaranteed and collections officials review each request.

The CRA will consider fully completed applications only, so a partial or placeholder filing is a poor fit.

Timing: why delay can cost you

A disclosure is not voluntary if an audit or investigation has been initiated against you or a related taxpayer for the disclosed information. This includes investigations by law enforcement, securities commissions or other federal or provincial regulators, not just the CRA.

The level of relief also depends on whether the CRA has already been in touch. An application is generally unprompted if the CRA has not communicated with you about the issue, or if the only contact was a general education letter. Unprompted applications normally receive 100% relief of applicable penalties and 75% relief of applicable interest.

An application is generally prompted if it follows a CRA communication identifying a specific error or setting a correction deadline, or follows third-party information about your non-compliance. Prompted applications normally receive 25% relief of applicable interest and up to 100% relief of applicable penalties. A CRA letter about a specific issue does not by itself end eligibility, as long as you are not under audit or investigation.

What to do next

If you are unsure whether to apply, a preliminary conversation can help you decide. Consider also speaking with a tax lawyer or accountant, who can look at the facts, including whether any CRA contact has already happened.

• Write down what was missed, which years are affected, and any CRA letters you have received.
• Gather your records for the affected years, since the application needs supporting documents.
• Estimate the tax owing and think about how you would pay it or propose a payment arrangement.
• Do not wait if you have received any CRA notice, because an audit or investigation can end eligibility.
• Use only one submission method when you are ready to apply.

Frequently asked questions