VOLUNTARY DISCLOSURE PROGRAM

The Voluntary Disclosures Program (VDP) lets taxpayers correct past errors or omissions (such as unreported income or foreign assets) before the CRA starts enforcement action, in exchange for relief from penalties and part of the interest. The program was revised for applications received on or after October 1, 2025.

RELIEF UNDER THE REVISED PROGRAM

• General relief (unprompted applications): 100 percent relief from penalties and 75 percent relief from interest on the disclosed amounts. No referral for criminal prosecution.

• Partial relief (prompted applications): up to 100 percent penalty relief and 25 percent interest relief.

• Gross negligence penalties are not applied to the disclosed non-compliance.

PROMPTED VERSUS UNPROMPTED

• Unprompted: no CRA communication about the specific issue has occurred. Applications after general education letters still count as unprompted.

• Prompted: the application follows CRA contact identifying a specific issue or setting a deadline, or the CRA has received third-party information about the taxpayer's potential non-compliance.

CONDITIONS

• Submit Form RC199, Voluntary Disclosures Program Application, with supporting documents.

• The disclosure must be voluntary, complete, and involve a penalty (or potential penalty).

• Include information for up to the most recent six years for Canadian-source matters and ten years for foreign-source income or assets.

• Pay the estimated tax owing (or arrange payment) when the application is accepted.

• Taxpayers under audit or investigation for the same matter are not eligible.

WHEN TO USE VDP INSTEAD OF AN ADJUSTMENT

Simple errors where no penalty applies (such as a forgotten slip in the most recent year) can be corrected with an adjustment request. VDP is for situations where penalties would otherwise apply, such as several years of unreported income or unfiled T1135 forms.