What Is the CRA Voluntary Disclosures Program in Canada?

Maybe you did not report some income, missed filing a return, or claimed expenses you should not have. Now you are worried about what the Canada Revenue Agency (CRA) might do if it finds out first. Many people in this position look for a way to fix things before that happens.

The CRA's Voluntary Disclosures Program, usually called the VDP, is one such route. This article explains in plain words what it is, who it may suit and what it can and cannot do for you. It is general information, not advice on your own file.

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

What the VDP is

The VDP lets you come forward to correct errors or omissions, such as unreported income or unfiled returns. If your application is accepted, the CRA may give you penalty and interest relief, and it will not refer the disclosed matter for criminal prosecution.

The current VDP circular, IC00-1R7, applies to applications received on or after October 1, 2025. Earlier applications fall under the older circular, IC00-1R6. Older terms such as general and limited relief have been replaced by the terms unprompted and prompted.

To qualify, the application must be voluntary and complete with all supporting documents, 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.

What it does and does not do

The CRA describes the VDP as providing relief on penalties and interest, not on the tax itself. Any tax owing must be paid.

• It may reduce or cancel penalties and some interest.
• It protects eligible applicants from prosecution for the information they disclosed.
• Gross negligence penalties do not apply to the information disclosed.
• It does not reduce the tax you owe.

The CRA also keeps the right to audit any information in your application, whether or not relief is granted. If it finds fraud or misrepresentation, it may assess any year.

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. If you cannot pay in full, you may ask for a payment arrangement on the application, but the CRA's approval is not guaranteed.

Situations the CRA lists as possibly eligible

For income tax, the CRA lists situations that may be eligible. Corporations can apply too.

• Not reporting or under-reporting income.
• Not reporting foreign income that is taxable in Canada.
• Not filing a return that is now a year late.
• Claiming ineligible expenses.
• Not remitting employee source deductions such as CPP and EI.
• Undisclosed tax liabilities.

Some situations are generally not eligible. These include applications that produce a refund or leave no tax or penalties owing, requests for relief on penalties or interest already assessed, and applications to make or alter an election.

On foreign property, the CRA says the VDP may be available if conditions are met, and to qualify you must file a valid disclosure. The reassessment period is extended by three years if income from specified foreign property was not reported and Form T1135 was not filed, not filed on time, or filed inaccurately.

GST/HST and related taxes are covered by Memorandum 16-5-1, which applies to applications received on or after October 1, 2025. The relief levels match income tax. GST/HST wash transactions that qualify under Memorandum 16-3-1 can receive 100% relief of applicable penalties and interest, whether the application is unprompted or prompted.

Unprompted and prompted applications

The relief you receive depends on whether the CRA had 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.

An application is generally prompted if it follows CRA contact identifying a specific error or setting a correction deadline, or follows third-party information about your non-compliance.

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

What to do next

If you are unsure, you may hold preliminary discussions with the CRA on an anonymous basis. These are informal and non-binding, and can be requested through the CRA's online callback form. An anonymous discussion is not an application, though.

If you go ahead, the application package is the completed, signed Form RC199, all returns, forms and schedules needed to correct the non-compliance, and payment or a request for a payment arrangement for the estimated tax owing. The CRA says it will consider fully completed applications only. Use one submission method only, and you can submit at any time of year.

If a representative submits for you, both you and the representative must sign the application, and the name of any adviser who helped must be included. The CRA may deny an application as incomplete if requested information or documents are not provided within a reasonable timeframe.

After you apply, the CRA sends an acknowledgement letter with the effective date of disclosure. Its decision letter states whether the application is unprompted or prompted, the relief level and the eligible tax years, and gives the reason if relief is denied. The CRA does not publish a processing time, so how long it takes is not something to count on.

If you disagree with a decision, you can ask in writing for a second administrative review, which the CRA asks you to do before applying for judicial review. There is no right of objection to a VDP decision.

• Write down which years and which kinds of income or filings are affected.
• Check whether you have received any CRA letter about the issue.
• Gather your records for the affected years.
• Estimate the tax you may owe and how you would pay it.
• Speak with a lawyer or accountant before filing, because the application must be complete.

Frequently asked questions