CRA Denied My Voluntary Disclosure: Your Options in Canada

You came forward to correct a tax error, and the CRA has now denied your Voluntary Disclosures Program (VDP) application or given you less relief than you expected. That is stressful, but the decision letter and the options after it follow a set path.

This article covers applications received on or after October 1, 2025, which fall under circular IC00-1R7. It explains why applications are denied, how to read the letter, and what you can do next. It is general information, and a lawyer or accountant can look at your particular facts.

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

Why the CRA denies or limits a VDP application

Most denials fall into a few groups. Knowing which one applies to you helps you decide what to do next.

• Not voluntary: a disclosure is not voluntary if an audit or investigation has been initiated against you or a related taxpayer for the disclosed information, including investigations by law enforcement, securities commissions or other federal or provincial regulators, not just the CRA.
• Incomplete: the CRA may deny an application if requested information or documents are not provided within a reasonable timeframe, or for insufficient information or other non-compliance. The VDP says it will consider fully completed applications only.
• Ineligible situation: examples include applications that produce a refund or no tax or penalties owing, requests for relief on penalties or interest already assessed, applications to make or alter an election, insolvency for the years involved, and matters tied to an advance pricing arrangement or a treaty competent authority agreement.

A CRA letter about a specific issue does not by itself end your eligibility. If you are not under audit or investigation, the CRA treats the application as prompted, which means partial relief.

Reading the decision letter

The decision letter states the application type (unprompted or prompted), the relief level and the eligible tax years. If relief is denied, it gives the reason. Read it closely, because a smaller result than you expected often comes from one of these items.

An application is generally prompted if it follows CRA communication identifying a specific error or setting a correction deadline, or follows third-party information about your non-compliance. An education letter alone does not make it prompted. Relief is also limited by the ten-calendar-year window in subsection 220(3.1) of the Income Tax Act, so older years may get reduced or no relief.

Step one: a second administrative review

If you disagree with the decision, you can ask in writing for a second administrative review by the Assistant Director of the Shawinigan National Verification and Collections Centre. The CRA asks applicants to do this before applying for judicial review.

A clear request usually points to the specific part of the decision you dispute, such as the prompted classification or a missing-document finding, and attaches anything that supports your position. If the problem was an incomplete file, a lawyer or accountant can help you see whether the gap can be explained.

Step two: Federal Court judicial review, and what is not available

Judicial review is heard in the Federal Court, using Form 301 Notice of Application and the filing fee. It generally must be filed within 30 days of the CRA's notification and follows the second review. Because of that short window, get advice early.

There is no right of objection to a VDP decision, so you cannot object to penalty and interest assessed under subsection 220(3.1). If you are not eligible for the VDP, other options include the taxpayer relief provisions. For example, penalties for filing Form T1135 late may otherwise be relieved only under those provisions on written request.

What stays true whatever the outcome, and what to do next

• The tax itself is still owed. VDP relief covers penalties and interest, not the tax.
• The CRA reserves the right to audit any information in a VDP application whether or not relief is granted, and if it finds fraud or misrepresentation, an assessment may cover any year.
• Prosecution protection applies only to eligible applications and for the disclosed information.

• Read the decision letter and note the application type, relief level, eligible years and any reason for denial.
• Check whether the issue is an audit or investigation, a missing document or an ineligible situation.
• Use the CRA callback form if you need to ask about the decision letter.
• Decide quickly whether to request the second review, keeping the 30-day judicial review timing in mind.
• Speak with a lawyer or accountant about the taxpayer relief provisions if the VDP is not available.

Frequently asked questions