CRA Voluntary Disclosures Program (VDP)
The CRA's Voluntary Disclosures Program (VDP) in 2026: A CPA's Complete Guide to Penalty and Interest Relief
If you've discovered an error, omission, or unfiled return sitting in your — or your corporation's — tax history, the Voluntary Disclosures Program is the CRA's formal mechanism for correcting it before the CRA finds it first. On October 1, 2025, the CRA overhauled the VDP for the first time since 2018, replacing the old “General vs. Limited” framework with a simpler and, in most cases, more generous two-tier system. This guide reflects those current rules under Information Circular IC00-1R7 (income tax) and GST/HST Memorandum 16-5-1 (GST/HST and related levies).
At SDG Accountant, we've filed VDP applications for clients since 2014 — through the pre-2018 rules, the 2018 tightening, and now the 2025 loosening. Below is what we tell clients in the room, not just the CRA's public messaging.
Professional Guidance. Practical Solutions. Peace of Mind.
What the Voluntary Disclosures Program (VDP) Actually Is (and Isn't)
The Voluntary Disclosures Program is a discretionary administrative relief program rooted in the taxpayer relief provisions of subsection 220(3.1) of the Income Tax Act, and the parallel provisions under the Excise Tax Act for GST/HST. It is not a tax amnesty, and it is not a loophole — the CRA’s own framing is that it rewards voluntary correction, not that it forgives tax owing. A successful disclosure can get you:
- Penalty relief — late-filing penalties, failure-to-report penalties, and installment penalties can be waived; gross-negligence penalties are off the table entirely for a valid disclosure.
- Interest relief — a defined percentage of the interest that has accrued on the tax owing is canceled.
- Protection from criminal prosecution — for the matter disclosed, under the Income Tax Act and Excise Tax Act.
What it does not do: eliminate the underlying tax debt. You still pay what was owed — the Voluntary Disclosures Program (VDP) removes the punitive layer, not the liability itself.
Insight💡SDG's
We regularly get calls from people who think the VDP will “wipe the slate clean.” It won't. What it will do is remove years of compounding penalties and a meaningful share of the interest — which, on an older balance, is often the larger number by the time you add it up.
The October 2025 Overhaul: What Actually Changed
CRA released IC00-1R7 on September 10, 2025, effective for all applications received on or after October 1, 2025. Applications filed before that date are still assessed under the old IC00-1R6 (2018) rules. Four changes matter most for practitioners:
01
Since 2018, the CRA has sorted disclosures into a “General Program” (unintentional errors, better relief) and a “Limited Program” (intentional non-compliance or large corporations, worse relief). That distinction has been scrapped. The only question that now matters is whether your disclosure was Unprompted or Prompted — see the table below.
02
Under the 2018 rules, almost any CRA contact — even a generic education letter — could disqualify a disclosure outright by making it “non-voluntary.” Under IC00-1R7, that's no longer automatic. The CRA has clarified (including in a June 2026 STEP Canada webcast) that a broad educational or reminder letter does not, by itself, make a subsequent disclosure “prompted” or non-voluntary. Only an actual audit or investigation into the specific matter disqualifies you outright. This is the single biggest practical shift: clients who previously assumed they'd “blown it” by receiving a CRA letter often still qualify — just potentially at the Prompted tier rather than Unprompted.
03
The Voluntary Disclosures Program now explicitly extends to disclosures under the Greenhouse Gas Pollution Pricing Act, the Select Luxury Items Tax Act, the Underused Housing Tax Act, the Digital Services Tax Act, and the Global Minimum Tax Act — relevant for corporate groups now navigating Pillar Two and luxury/UHT filings for the first time.
04
The application form itself was streamlined and became available on October 1, 2025, alongside the new circular.
The Two Relief Tiers: Unprompted vs. Prompted
| Audit Protection | Unprompted | Prompted |
|---|---|---|
|
Applies When |
No CRA communication about this specific issue before you disclose |
You disclose after some CRA contact on the issue (e.g., an education letter, a query, a compliance reminder) — but before an audit or investigation begins |
|
Penalty Relief |
Full (100%) |
Up to 100%, at CRA discretion |
|
Interest Relief |
75% |
25% |
|
Gross-negligence Penalty |
Does not apply |
Does not apply |
|
Prosecution Risk |
Protected |
Protected |
|
Still Ineligible |
— |
Matters already under active audit or investigation |
Insight💡SDG's
The 75%-vs-25% interest gap is where the real money sits, and it's entirely time-driven. On a balance that's accrued interest for six or seven years, that 50-point swing can be tens of thousands of dollars. This is the single strongest argument for coming forward the moment you suspect an issue, rather than waiting to see if the CRA notices — because once any CRA contact touches the matter, you've likely dropped into the Prompted tier even if you're still eligible at all.
A third route exists specifically for GST/HST wash transactions — where a registrant failed to charge/collect GST/HST from another registrant who would have been fully entitled to claim it back as an input tax credit anyway. These can qualify for 100% relief of the applicable penalties and interest, since there was no net revenue loss to the Crown.
Eligibility: The Five Conditions, With the Nuance CRA Won't Spell Out
A valid disclosure must satisfy all five of the following. We walk through the technical read on each:
01
The disclosure must be made before the CRA has started an audit or investigation into the specific matter. As discussed above, this bar is now measurably lower than it was pre-2025 — a generic reminder or education letter no longer automatically disqualifies you, though it will likely push you into the Prompted tier rather than Unprompted.
02
The application must include all relevant information for every affected year or reporting period — not a partial fix of the parts you're most worried about. A disclosure that omits a known issue can be denied in its entirety, not just for the omitted piece.
03
The error or omission must actually carry a penalty and/or interest — a disclosure that would result in a refund only, with no penalty exposure, doesn't qualify for VDP treatment (though you can and should still correct it through a normal adjustment request).
04
The return, form, or reporting period in question must be at least one full year (or one reporting period, for GST/HST) past its original due date.
05
The application must include payment of the estimated tax owing, or a request for a payment arrangement if you can't pay in full immediately. A payment arrangement request keeps the disclosure valid — simply being unable to pay is not, on its own, a disqualifier.
What typically won’t qualify: matters already under active audit or investigation, refund-only filings, years where penalties or interest have already been formally assessed, and years involving an insolvency event (bankruptcy/proposal).
Common Situations That Bring Clients to Us
- A personal or corporate return that was never filed and is now well past due
- Unreported or under-reported income — Canadian-sourced or foreign-sourced (rental income abroad, foreign investment income, offshore business income)
- A missed Form T1135 (Foreign Income Verification Statement) — one of the most common triggers we see, especially for immigrants to Canada who held pre-existing foreign property or investment accounts and didn't realize the reporting obligation followed them
- GST/HST that was never charged, collected, or remitted
- Unremitted employee source deductions (CPP/EI withholdings that were deducted from payroll but never sent to the CRA)
- Ineligible expenses, credits, refunds, or rebates claimed in a prior filing
- Unreported cryptocurrency dispositions or mining/staking income
- Corporate groups now realizing they have unaddressed Underused Housing Tax, Digital Services Tax, or Global Minimum Tax filing obligations
Look-Back Periods: How Far Back You Need to Go
| Category | Look-back Period |
|---|---|
|
Foreign-sourced income or assets (including T1135) |
10 years |
|
Canadian-sourced income or assets |
6 years |
|
GST/HST information |
4 years |
These periods define how many years of returns and forms typically need to be reconstructed and filed as part of a complete application — not how far back CRA can otherwise reassess under its ordinary reassessment powers, which differ.
What a Complete Application Includes
The CRA only reviews complete submissions.
A valid VDP package bundles:
- The signed Form RC199 (Voluntary Disclosures Program Application) — the 2025-simplified version
- Every return, form, and schedule needed to correct the issue for the full look-back period
- Payment of the estimated tax owing, or a formal payment-arrangement request
How to submit (choose one):
- Online — via My Account, My Business Account, or Represent a Client (fastest, and our preferred method for tracking status)
- By fax — to the CRA's Voluntary Disclosures Program intake line
- By mail — to the Voluntary Disclosures Program intake centre in Shawinigan, Quebec
Before you file, you (or your Toronto Accountant) can request an informal, non-binding pre-disclosure discussion with the CRA on a no-name basis — meaning you can explore whether your situation would likely qualify, and at what tier, without identifying the taxpayer. We run this analysis for the vast majority of clients before anything is filed under their name.
Why Work with SDG Accountant?
Professional. Reliable. Results-Driven.
01
Cross-Border Tax Expertise
Specialized knowledge of U.S. and Canadian tax systems.
02
Professional CRA/IRS Representation
Assistance with CRA/IRS communication, documentation, and compliance matters.
03
Personalized Compliance Strategy
Solutions designed according to your individual tax situation.
04
Toronto-Based Team
Serving individuals and businesses throughout Toronto and Canada.
05
Reliable, Trusted, Results-Driven
Professional support for complex international tax matters.
Why the Toronto Accountant Doing the Filing Actually Matters
Not every Voluntary Disclosures Program (VDP) application filed is accepted, and the CRA retains significant discretion at every stage — from whether the disclosure is voluntary, to which tier applies, to how much relief is granted within that tier. The technical judgment calls that separate an accepted application from a denied one usually come down to:
- Correctly characterizing prior CRA contact (does an old letter actually make this Prompted, or does it not touch the specific matter at all?)
- Structuring the disclosure to be genuinely complete — including issues the client didn't think to mention
- Getting the tax-owing estimate right the first time, since a materially wrong number can undermine the “payment” condition
- Knowing when a no-name pre-disclosure discussion is worth running before committing a client's name to the file
This is where a Toronto Accountant who files VDPs regularly — rather than once every few years — earns their fee. At SDG Accountant, our process runs: Review → Pre-Disclosure (where useful) → Prepare → File & respond → Stay compliant, so the engagement doesn’t end at acceptance — we also help make sure the same issue doesn’t recur in next year’s filing.
If you think you may be behind on a filing — personal, corporate, or GST/HST — the sooner you come forward, the more relief is available. Book a free consultation or reach our Toronto office directly at 👉
PRICINGHave Any Questions About VDP?
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Not automatically. Since October 2025, general education letters and routine compliance reminders don't disqualify you outright — they may shift you from the Unprompted to the Prompted tier, with reduced (but still real) interest relief. An active audit or investigation into the specific matter is what closes the door.
No. The VDP removes penalties and a portion of the interest. The underlying tax liability is still payable, in full or under a payment arrangement.
Both. Individuals, corporations, trusts, partnerships, and GST/HST registrants can all apply, provided the five eligibility conditions are met.
Generally, up to 10 years for foreign-sourced income or assets, 6 years for Canadian-sourced income or assets, and 4 years for GST/HST — see the look-back table above.
A payment-arrangement request satisfies the payment condition — you don't need the full amount in hand to file a valid disclosure.
Yes — a no-name pre-disclosure discussion lets your accountant sound out CRA on the facts of your case before any name is attached to the file.