Voluntary Disclosure After CRA Contact: Your Options in Canada

A letter from the CRA can make your stomach drop, especially if it touches on something you already knew was wrong. The natural question is whether it is too late to come forward on your own.

The answer depends on what the CRA sent and what it has started. This article explains how the Voluntary Disclosures Program (VDP) draws the line between a letter, an audit and an investigation, and what to do while you work out where you stand.

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

What makes a disclosure voluntary

The application must be voluntary and complete, must involve interest, penalties or both, must include information at least one year past the filing due date, and must include payment of the estimated tax owing or a request for a payment arrangement.

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.

A letter is not the same as an audit

A CRA letter or notice about a specific issue does not by itself end eligibility. The CRA treats such an application as prompted if you are not under audit or investigation.

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. It is generally unprompted if the CRA has not communicated with you about the issue, or the only contact was a general education letter.

Whether your letter is a general reminder, a request about a specific item, or the start of an audit is a question of fact. If you cannot tell, a lawyer or accountant can help you read it.

What relief to expect

These are the levels applications normally receive, not fixed outcomes. 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.

For GST/HST the relief matches income tax: unprompted gets 75% interest relief and 100% penalty relief, while prompted gets 25% interest relief and up to 100% penalty relief. An application is not voluntary for GST/HST either if an audit or investigation has started against the person or a related person.

Even with relief, the tax itself must be paid in full.

Other points to weigh

• The matter must still be within what the VDP covers. Applications that produce a refund or no tax or penalties owing are generally not eligible.
• Penalties or interest that have already been assessed cannot be the subject of VDP relief requests.
• The CRA reserves the right to audit any information in an application whether or not relief is granted.
• If you cannot pay in full, you may ask for a payment arrangement, but approval is not guaranteed and collections officials review each request.
• The VDP changed for applications received on or after October 1, 2025, and earlier applications fall under the older circular.

What happens after you apply

After receiving an application, the CRA sends an acknowledgement letter with the effective date of disclosure (EDD). Relief runs up to the EDD if you qualify.

The CRA does not publish a processing time for VDP applications. The stages are submission, acknowledgement with the EDD, review for eligibility (which can include requests for more information), then a written decision.

The CRA may deny an application as incomplete if requested information or documents are not provided within a reasonable timeframe. The decision letter states whether the application is unprompted or prompted, the relief level and the eligible tax years, and if relief is denied it gives the reason.

• If you disagree with a decision, you can ask in writing for a second administrative review by the Assistant Director of the Shawinigan National Verification and Collections Centre.
• Judicial review is in the Federal Court, using Form 301 Notice of Application. It generally must be filed within 30 days of the CRA's notification and follows the second review.
• There is no right of objection to a VDP decision.

What to do next

• Keep the CRA letter and note its date, what it asks for and any deadline it sets.
• Do not ignore a deadline in the letter while you consider the VDP.
• List what is wrong and for which years, and gather the supporting records.
• If you are unsure, you can hold an informal, non-binding anonymous discussion with the CRA through its online callback form. It is not an application, and an effective date of disclosure is only assigned once the CRA acknowledges one.
• If you proceed, prepare a signed RC199, corrected returns and payment or a payment arrangement request.

Because timing and the exact nature of the contact decide eligibility, it is sensible to speak with a lawyer or accountant before you file.

Frequently asked questions