Understanding the Voluntary Disclosure Program in Canada – Key changes effective October 1, 2025

Givens LLP | November 18, 2025

SHARE

 

The Voluntary Disclosure Program (VDP) is a program run by the CRA that allows taxpayers (and registrants) to come forward on a case-by-case basis and correct errors or omissions in their tax filings before the CRA initiates an audit or investigation. In return, successful applicants may receive relief from penalties, interest, or prosecution.

Traditionally, the key features of the VDP have included:

  • Voluntariness: the disclosure must be made voluntarily (i.e., before the CRA begins enforcement action)
  • Completeness: all known omissions or errors must be disclosed.
  • Payment: the tax owing must be paid or an arrangements must be made.
  • Relief: if accepted, the taxpayer can receive relief from certain penalties and interest

What’s changed – effective October 1, 2025

As of October 1, 2025, changes to the CRA Voluntary Disclosure Program (VDP) came into effect. These changes will provide ease to taxpayers and registrants as they go about correcting unintentional filing errors or omissions. The changes to the program are meant to make the program more accessible.

Application received on or after October 1, 2025 will be judged under the new changes to the policy.

Here are the major changes.

1. Expanded eligibility (less restrictive “voluntariness” threshold)

Under the old policy, any communication from the CRA (letters, notices) could disqualify an application because the “voluntary” standard was compromised.

  • Under the new policy, the CRA defines an application as not voluntary (and therefore ineligible) only if an audit or investigation has been initiated against the taxpayer (or a related person) in respect of the disclosed information. So: routine letters or educational communications no longer automatically disqualify eligibility.
  • The CRA also clarifies that “prompted” applications (i.e., where the taxpayer has received a communication about a specific compliance issue) may be eligible under a new partial-relief tier.

2. Updated relief: Two-tier relief model

The VDP is now offering two new relief tiers: General and Partial relief. The CRA will determine which type of relief is granted based on the type of application.

  • General relief: for “unprompted” disclosures (no prior identified compliance contact); eligible for 100% penalty relief and 75% interest relief.
  • Partial relief: for “prompted” disclosures (after CRA communication about a compliance issue); eligible for up to 100% penalty relief and 25% interest relief.  

3. Simplified application form & process

  • A new and simpler version of Form RC199 (VDP application) will be available
  • The CRA indicates that they have made the application form more accessible, simpler and easier to use.

4. Clarified documentation/time-frame requirements

The updated policy provides clearer guidelines on which documents must be included in the application, depending on the nature of the disclosure. As expected, taxpayers will need to include the appropriate supporting documents (i.e. returns, forms, statements, and schedules) needed to correct the non-compliance.

For scenarios involving non-compliance over multiple years, the CRA indicates that taxpayers should include the following documents:

  • For Canadian-sourced income/assets: most recent 6 years.
  • For foreign-sourced income/assets: most recent 10 years.
  • For GST/HST/indirect tax matters: most recent 4 years.

However, any tax years or reporting periods within the above timeframes that have no errors or omissions will not need to be included within the application. The CRA retains the right to ask for additional years beyond these periods if necessary.

5. Broader scope of taxes covered

The new policy explicitly incorporates a broader range of tax statutes: e.g., luxury tax, digital services tax, underused housing tax, global minimum tax, in addition to income tax, GST/HST, excise taxes, etc.

Why these changes matter

These updates represent a meaningful shift in the CRA’s approach and could have several practical implications:

  • Lower barrier to coming forward: Because the “voluntary” threshold has been relaxed (especially for prompted disclosures), some taxpayers who previously believed they were ineligible might now reconsider using the VDP.
  • Greater relief potential: The improved interest relief (up to 75%) and full penalty relief for unprompted cases make the program more attractive. For large taxpayers who previously feared limited relief or large interest charges, this is a positive development.
  • Simplification and clarity: The streamlined application form, clearer documentation rules, and enhanced plain-language guidance reduce uncertainty and administrative burden.
  • Broader coverage of tax types: With the inclusion of newer tax statutes (digital services tax, luxury tax, fuel charges, etc.), taxpayers dealing with emerging tax obligations have a clearer path to correct prior years.
  • Risk mitigation: Voluntarily coming forward under the VDP (when eligible) can help avoid harsher consequences (e.g., full penalties, interest, and even potential prosecution) if the CRA later discovers the non-compliance.

Things that remain the same – and key caveats

  • Even under the new changes, applications must still be voluntary: if an audit/investigation has already been initiated in respect of the issue, the taxpayer remains ineligible.
  • The taxpayer must still be complete in disclosure: all known errors and omissions must be corrected.
  • Tax owing must still be paid for the disclosure to be accepted. The relief applies only to interest and penalties.
  • Relief is not automatic; the CRA retains discretion to accept or reject VDP applications under the criteria.
  • Note the limitation period: For income tax matters, the statutory 10-year limitation period under subsection 220(3.1) of the Income Tax Act continues to apply.

Final Thoughts

The CRA’s revamped Voluntary Disclosures Program (VDP) makes it easier for taxpayers to correct past mistakes — but navigating it still requires precision and full transparency. Whether you're dealing with unreported income, hidden assets, or other compliance issues, Givens LLP is here to guide you every step of the way. We simplify the process, ensure your disclosure meets all requirements, and help you move forward with confidence.

RECENT POSTS