CRA Voluntary Disclosures Program (VDP): Rules After October 1, 2025

The CRA Voluntary Disclosures Program (VDP) lets a taxpayer or registrant correct a past error or omission in their Canadian tax affairs and receive relief from some penalties and interest. It was reshaped for applications received on or after October 1, 2025, and the CRA now accepts some applicants who were prompted by a CRA communication. For people with unreported foreign income, a missed T1135 or an unfiled return, the program can turn an open-ended risk into a known cost, as long as the application is made before the CRA starts an audit or investigation.

How does the CRA Voluntary Disclosures Program work?

The CRA grants relief case by case to taxpayers who come forward. Applications received before October 1, 2025 are reviewed under the previous policies (IC00-1R6 and GST/HST Memorandum 16-5); the newer rules are in IC00-1R7. The program now has two relief tiers:

The CRA says every eligible application also receives protection from criminal prosecution, and gross negligence penalties do not apply. For GST/HST wash transactions, relief is 100 percent of penalties and interest where the transaction qualifies.

Who is eligible to apply?

You must meet all five conditions:

1. Timing. You apply before an audit or investigation has begun against you or a related taxpayer.
2. Completeness. You include all relevant information and documentation for the required tax years or reporting periods.
3. Penalty exposure. The information includes an error or omission with applicable interest and penalties.
4. Lateness. The information is at least one year or one reporting period past the filing due date.
5. Payment. You include payment of the estimated tax owing, or request a payment arrangement, which the CRA must approve.

The CRA says taxpayers prompted by communications about a potential non-compliance issue can now apply, while those under audit or investigation, and those who were egregiously non-compliant, remain restricted. It also typically will not grant relief for applications that involve only refunds or no taxes or penalties owing, increases in input tax credits or credits without a matching liability, relief on penalties or interest already assessed, elections, insolvency events, advance pricing arrangements or discretionary treaty agreements. If you are unsure, the CRA says you can apply anyway or request a pre-disclosure discussion through its online callback request form.

How to apply step by step

1. Stop and review. List every year and every item: unreported foreign income, foreign property that required a T1135, unfiled returns, or unreported income or GST/HST.
2. Check for CRA contact. Any audit letter, requirement or investigation inquiry for you or a related person usually ends eligibility. Prompted letters change the tier, not necessarily eligibility.
3. Prepare the returns and forms. Complete every return, form and schedule needed to correct the non-compliance. The CRA considers fully completed applications only. Provide documents for the last ten years of foreign-sourced income or assets, the last six years of Canadian-sourced income or assets and, for GST/HST, the last four years; years with no errors can be left out, and the CRA may request earlier years.
4. Complete Form RC199. The Voluntary Disclosures Program application must be signed. If a representative submits it, both of you must sign, and the representative must be on file with the CRA or you must attach an authorization.
5. Estimate and pay. Include payment of the estimated taxes, or request a payment arrangement.
6. Choose one submission method. Online is fastest: My Account for individuals, My Business Account for businesses or Represent a Client for representatives. Fax and mail are also available; use only one method.
7. Wait for the acknowledgement letter, which confirms the effective date of disclosure.

What happens after you apply?

The CRA may request more information and may deny an incomplete application if the items are not provided within a reasonable timeframe. The CRA's pages do not state how long the review takes. If relief is granted, the decision letter states whether the application was prompted or unprompted, the relief level and the eligible years. If it is not granted, the letter gives the reason.

There is no right of objection to a VDP decision, and the Income Tax Act prohibits objecting to penalties and interest assessed under subsection 220(3.1). You can instead:

• request a second administrative review by writing to the named CRA office, which the CRA generally expects first, or
• apply to the Federal Court for judicial review using Form 301 and the filing fee.

If you do not qualify, you may still be eligible for the taxpayer relief provisions, or you can request a remission review. See CRA penalties and interest.

How the other countries handle voluntary corrections

If you have Indian assets while living in Canada, or Canadian accounts while living in the US, the same facts may need correction in more than one country. Read the three-country reporting guide and plan the order of filings with your professionals.

A worked example

Ritu and Amit moved to Mississauga from Pune in 2018. They never reported interest from Indian bank accounts or rent from a flat in Pune on their Canadian returns, and they did not file T1135s. In October 2026, with no CRA contact, they apply unprompted. Their Canadian CPA estimates tax of $18,000, penalties of $4,500 and interest of $3,200. If accepted at general relief, the penalties would be removed and 75 percent of the interest relieved, leaving about $800 of interest, so they would pay roughly $18,800 and amended returns would follow. If the CRA had already sent an education letter, the application would be prompted, so interest relief would be 25 percent. Because the same assets could involve US filings if either spouse is a US person, a US review is also needed. All figures are hypothetical.

Mistakes to avoid

• Waiting until a CRA letter arrives. Applying after an audit or investigation has begun is too late.
• Submitting a partial application. Incomplete applications can be denied.
• Applying for relief on penalties or interest already assessed.
• Forgetting the payment or payment arrangement.
• Ignoring the US or Indian side of the same facts.

How we can help

We do not file the VDP or represent clients before the CRA. Your Canadian CPA or tax lawyer prepares the application. From our Aurora, Illinois area base, we handle the U.S. side: reviewing whether the same facts require FBAR, Form 8938, Form 5471 or amended US returns, and coordinating timing with your Canadian professional and your Indian Chartered Accountant. We cannot promise relief. If there is any chance conduct could be viewed as willful, speak to a tax lawyer first. See foreign account and asset reporting and cross-border tax. Browse the notices hub for every guide in this series.

Frequently asked questions

General information only. It is not tax, legal, accounting or immigration advice for your situation, and rules change; confirm the current rules with the official source or a licensed professional in the relevant country.