The CRA Voluntary Disclosure Program, officially the Voluntary Disclosures Program (VDP), lets you correct unfiled returns, unreported income and other past tax mistakes on your own initiative, before an audit or investigation starts. In exchange, the CRA cancels some or all of the penalties and part of the interest. You still pay the tax in full.
The program’s rules changed on October 1, 2025. Applications are now sorted into unprompted and prompted, and a CRA letter about a possible issue no longer rules you out. This guide explains who qualifies, how much relief to expect, what an application needs and what happens after you apply, for Ottawa individuals and business owners who are behind on filings or know a past return was wrong.
Table of Contents
- What the Voluntary Disclosures Program covers
- What changed on October 1, 2025
- Who qualifies for the VDP
- How much relief you can expect
- How to apply, step by step
- What happens after you apply
- How BBA Tax helps with unfiled and incorrect returns
- Frequently Asked Questions
Key Takeaways
- The VDP lets you fix past non-compliance on your own initiative in exchange for relief from penalties and part of the interest. The tax itself is still owed in full.
- Since October 1, 2025, unprompted applications get 100% penalty relief and 75% interest relief. Prompted applications get up to 100% penalty relief and 25% interest relief.
- A CRA letter about an identified issue makes your application prompted, not ineligible. An audit or investigation of you or a related taxpayer on the same information does rule you out.
- You apply on Form RC199 with every corrected return, plus payment of the estimated tax or a request for a payment arrangement.
- Returns that would produce a refund or no balance owing don’t qualify. File those the normal way.
What the Voluntary Disclosures Program covers
The VDP is the CRA’s formal process for correcting past tax mistakes before the CRA finds them through an audit or investigation. According to Information Circular IC00-1R7, it applies to income tax, GST/HST, withholding taxes and excise duties.
The CRA gives these examples of situations that can qualify:
- you didn’t file a return for a past year and it is now at least a year late;
- you didn’t report your income, or you under-reported it;
- you didn’t remit source deductions for your employees; and
- you didn’t report foreign income that is taxable in Canada.
If your application is eligible for relief, the CRA also grants protection from prosecution for what you disclosed. What the VDP doesn’t do is reduce the tax: the circular states that any taxes owing still have to be paid in full.
If you’re not sure how far back your problem goes, our guide to how far back the CRA can audit you explains the CRA’s normal time limits.
What changed on October 1, 2025
The CRA rewrote the program for applications received on or after October 1, 2025. The current rules are in IC00-1R7, with a matching GST/HST memorandum, and applications received before that date are handled under the old circular, IC00-1R6.
The biggest change, set out on the CRA’s changes to the VDP page, is how applications are classified:
- Unprompted: you apply when there has been no communication from the CRA, verbal or written, about an identified compliance issue.
- Prompted: you apply after the CRA has communicated with you about an identified compliance issue related to your disclosure, such as a letter about a specific tax issue.
Prompted applications get less interest relief, but the CRA now accepts them. The line that still matters is an audit or investigation. Once one has started against you or a related taxpayer about the information you want to disclose, the VDP is no longer available for it.
Who qualifies for the VDP
You qualify if your application meets all five of the CRA’s eligibility conditions:
- It is voluntary. You apply before an audit or investigation has started against you, or a related taxpayer, about the information you are disclosing.
- It is complete. It includes all relevant information and documents for the required years.
- It involves interest or penalties. There is an error or omission that carries interest charges, penalties or both.
- It is at least a year overdue. The information is at least one year, or one reporting period, past its filing due date.
- It includes payment. You include payment of the estimated tax owing, or a request for a payment arrangement.
Situations the VDP won’t accept
The CRA won’t accept an application that relates only to returns producing a refund, or with no taxes or penalties owing. It also won’t use the VDP to cancel penalties or interest that have already been assessed, or to make or change an election.
If your unfiled years would all produce refunds, simply file them. The late-filing penalty is a percentage of the balance owing, so a return with nothing owing doesn’t attract one. For penalties already on your account, the separate taxpayer relief process (Form RC4288) may help, although the CRA’s relief page currently shows an average processing time of about 16 months.
If an audit has already started on the issue you wanted to disclose, the VDP is off the table for that issue and the priority is to respond to the audit. Our guide to responding to a CRA review or audit letter explains how.
How much relief you can expect
Relief depends on whether your application is unprompted or prompted. The CRA calls these general relief and partial relief, and the difference is mostly in the interest:
| Item | Unprompted (general relief) | Prompted (partial relief) |
|---|---|---|
| When it applies | No CRA communication about the issue before you apply | You apply after the CRA communicated with you about the issue |
| Penalty relief | 100% | Up to 100% |
| Interest relief | 75% | 25% |
| Protection from prosecution | Yes, if eligible for relief | Yes, if eligible for relief |
| The tax itself | Paid in full | Paid in full |
| Example: $20,000 tax, $3,000 penalties, $2,400 interest | $20,600 ($20,000 tax plus $600 interest) | At least $21,800 ($20,000 tax plus $1,800 interest, plus any penalties not relieved) |
The example uses round numbers to show how the percentages work. Your figures will depend on your years and amounts. According to a June 2026 CRA tax tip, relief applies to penalties and interest going back up to 10 years from the disclosure date.
Interest keeps running until you pay. The CRA’s rate on overdue taxes is 7% for October to December 2026, compounded daily, and the circular says relief is granted up to your effective date of disclosure. Paying the estimated tax with your application limits the interest that builds up after that date. For what happens when tax goes unpaid without the program’s protection, see what happens if you don’t pay your taxes in Canada.
Behind on filings and not sure if you qualify? BBA Tax can review your situation and tell you whether a voluntary disclosure, a regular catch-up filing or another route makes more sense. Book a free intro call.
How to apply, step by step
An application is a complete correction package, not a request for leniency. The CRA’s how-to-apply instructions set out what it must contain:
- Consider an anonymous discussion first. You can ask for a pre-disclosure discussion through the CRA’s online callback request. It is informal and non-binding, and it can happen before you reveal your identity.
- Gather records for the required years. Include the last six years if the error involves Canadian income or assets, the last ten years for foreign income or assets, and the last four years for GST/HST.
- Prepare every corrected return. Include all the returns, forms and schedules needed to correct the non-compliance.
- Complete and sign Form RC199. If a representative applies for you, you both sign.
- Pay or ask for an arrangement. Include a payment, or a request for a payment arrangement, for the estimated tax owing.
- Submit using one method only. Apply online through My Account, My Business Account or Represent a Client, or send the application by fax or by mail to the program’s office in Shawinigan, Quebec. The fax number and mailing address are on the CRA’s instructions page.
Gathering records is often the slowest step, especially when the books have fallen behind. Our guide to catch-up bookkeeping walks through bringing records up to date and dealing with missing documents.
What happens after you apply
After you apply, the CRA sends an acknowledgement letter confirming your effective date of disclosure. That date matters, because the circular says relief is granted up to it.
A CRA officer then reviews the application and may ask for more information. The circular says an application may be denied if you fail to provide the required information, so answer any request fully and by the date given.
If you disagree with the decision, you can ask in writing for a second administrative review. After that, you can apply to the Federal Court for judicial review. In the meantime, keep your current returns and payments up to date, since the VDP only deals with the past.
How BBA Tax helps with unfiled and incorrect returns
BBA Tax is an Ottawa accounting firm in Westboro led by Karim Bitar, Lead Accountant and ELITE Certified QuickBooks ProAdvisor. If you are behind on filings, our unfiled taxes and catch-up filing service is the place to start: we work out which years are missing, rebuild the records and prepare the returns, whether they go in through the VDP or as regular late filings.
We prepare personal tax returns and corporate returns, and we can deal with the CRA for you as your authorized representative, including during CRA reviews and audits. We meet Ottawa clients in person and work with clients elsewhere in Canada remotely.
Ready to deal with your unfiled years? See your starting price with our 5-minute instant online quote.
Conclusion
The CRA Voluntary Disclosure Program is the formal way to fix past tax mistakes on your own initiative. Since October 1, 2025, unprompted applications get full penalty relief and 75% interest relief, and prompted applications can still get up to full penalty relief and 25% interest relief. The trade-off is completeness: every affected year and issue, with payment or a payment arrangement. Apply before an audit or investigation starts, and the sooner you apply, the less interest builds up.
Frequently Asked Questions
Can I still use the VDP if the CRA has already contacted me?
Usually, yes. If the CRA has contacted you about an identified issue but hasn’t started an audit or investigation, your application is treated as prompted. Prompted applications can get up to 100% penalty relief and 25% interest relief. If an audit or investigation of you or a related taxpayer has already started on the same information, the VDP isn’t available for that issue.
Do I have to pay the tax when I apply?
You must include payment of the estimated tax owing, or a request for a payment arrangement. The VDP never reduces the tax itself. Paying up front also helps with interest, because relief is granted only up to your effective date of disclosure, and the CRA’s rate on overdue taxes is 7% for October to December 2026, compounded daily.
How many years do I need to include?
The CRA asks for the last six years when the error involves Canadian income or assets, the last ten years for foreign income or assets, and the last four years for GST/HST. Relief applies to penalties and interest going back up to 10 years from the disclosure date. Include every affected year, because an incomplete application can be denied.
Can I use the VDP for unfiled returns that would give me a refund?
No. Applications that relate only to refund or nil-balance returns aren’t eligible, so file those years the normal way. Because the late-filing penalty is a percentage of the balance owing, a return with nothing owing doesn’t attract one. Don’t wait too long, though: the CRA can’t issue a refund for a tax year more than 10 calendar years back.
Does the VDP cover GST/HST and payroll remittances?
Yes. The program covers income tax, GST/HST, withholding taxes and excise duties, and the CRA lists unremitted employee source deductions as an example of an eligible situation. For GST/HST errors, the CRA asks for records covering the last four years. The application still has to meet all five eligibility conditions, including payment or a payment arrangement.
Can I talk to the CRA without giving my name?
Yes. Before you apply, you can request a pre-disclosure discussion through the CRA’s online callback request. The CRA describes these discussions as informal and non-binding, and they can happen before you reveal your identity. They help you understand the process, but relief only comes from a complete, signed application that the CRA accepts.
