- The VDP only helps if your application is voluntary, complete, involves penalties or interest, and includes payment or a payment-arrangement request.
- An audit or investigation against you or a related taxpayer means the disclosure is not voluntary.
- The VDP never relieves the tax itself, and a VDP decision cannot be objected to, though other relief options may exist.
You may have missed income, filed late or made a mistake on a return, and you are wondering whether the CRA's Voluntary Disclosures Program (VDP) can help. It can fix many problems, but it does not fix all of them.
This article covers the situations the CRA excludes for applications received on or after October 1, 2025, and what you can look at instead. It is general information, so a lawyer or accountant can confirm how it applies to you.
This article covers Canadian federal tax law, which applies in every province.
The conditions every application must meet
The current rules are in circular IC00-1R7, which applies to applications received on or after October 1, 2025. Earlier applications fall under IC00-1R6. For GST/HST and related taxes, Memorandum 16-5-1 applies to applications received on or after October 1, 2025, and earlier ones fall under Memorandum 16-5.
If you miss one of the conditions in paragraph 10 of the circular, the application does not qualify. Those conditions are:
- The application 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.
- It must include payment of the estimated tax owing, or a request for a payment arrangement.
Approval of a payment arrangement is not guaranteed, and collections officials review each request.
Situations the CRA generally excludes
The CRA lists several situations that are generally not eligible for income tax. For GST/HST, some of the same exclusions apply, plus one more.
| Situation | Applies to |
|---|---|
| Application produces a refund, or no tax or penalties owing | Income tax |
| Request for relief on penalties or interest already assessed | Income tax |
| Application to make or change an election | Income tax and GST/HST |
| Insolvency for the years involved | Income tax and GST/HST |
| Matters tied to an advance pricing arrangement or a treaty competent authority agreement | Income tax |
| Input tax credit increases with no matching tax liability increase | GST/HST |
If your situation looks like one of these, the VDP is probably not the right tool. A lawyer or accountant can help you confirm that.
When an audit or investigation has already started
A disclosure is not voluntary if an audit or investigation has been started against you or a related taxpayer for the information you want to disclose. This includes investigations by law enforcement, securities commissions or other federal or provincial regulators, not only the CRA. The same rule applies to GST/HST, where the audit or investigation may be against the person or a related person.
A CRA letter or notice 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. An application is generally prompted if it follows CRA communication identifying a specific error or setting a correction deadline.
Repeat applications, old years and the tax itself
- Repeat applications: if you got VDP relief before, you must stay compliant. A later application may be considered if the circumstances were beyond your control or concern a different matter.
- Older years: the CRA's legal basis for cancelling penalties and interest is subsection 220(3.1) of the Income Tax Act. The request must be made on or before the day ten calendar years after the end of the taxation year. Older years may get reduced or no relief.
- The tax itself: the VDP provides relief on penalties and interest, not on the tax. Tax owing must be paid.
Even with an accepted application, the CRA reserves the right to audit any information in it. If it finds fraud or misrepresentation, an assessment may cover any year.
If the VDP is not available: other options
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, other options include the taxpayer relief provisions.
Foreign property is one example. Penalties for failing to file Form T1135 by the deadline may otherwise be relieved only under the taxpayer relief provisions, on written request. If you disagree with a VDP decision, you can ask in writing for a second administrative review before considering judicial review.
- Check whether any CRA audit or investigation, or one by another regulator, has started on the issue.
- Check whether the problem is on the excluded list, such as an election or an already-assessed penalty.
- Note which tax years are involved and how far back they go.
- Gather your records and talk to a lawyer or accountant before filing anything.
- If you are unsure, you can ask for an anonymous, non-binding discussion with the CRA first.
Frequently asked questions
Can I still apply if the CRA has sent me a letter?
Often yes. A letter about a specific issue does not by itself end eligibility, but the application is treated as prompted, with partial relief, if you are not under audit or investigation. A general education letter alone does not make an application prompted.
Can I ask the VDP to cancel penalties the CRA already assessed?
Requests for relief on penalties or interest already assessed are generally not eligible. The taxpayer relief provisions may be an alternative.
Does the VDP reduce the tax I owe?
No. It provides relief on penalties and interest, not on the tax itself, and the tax owing must be paid.
Can I object if my VDP application is denied?
There is no right of objection to a VDP decision. You can ask in writing for a second administrative review.
Sources
- CRA – IC00-1R7 Voluntary Disclosures Program — canada.ca
- CRA – VDP income tax eligibility — canada.ca
- CRA – The Voluntary Disclosures Program: Your second chance to set things right (June 15, 2026) — canada.ca
- Income Tax Act, s. 220(3.1) — Justice Laws (federal)
- CRA – Our review and decision (VDP) — canada.ca
- CRA – Questions and answers about Form T1135 — canada.ca
- CRA – GST/HST Memorandum 16-5-1 — canada.ca
Links go to official government, court and regulator pages. The law changes — confirm you are reading the current version.
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