Canada Revenue Agency updates Voluntary Disclosures Program

The Canada Revenue Agency (CRA) recently announced changes to the Voluntary Disclosures Program (VDP) effective October 1, 2025. These changes are intended to make the program more accessible and increase the relief available for taxpayers correcting unintentional errors or omissions.

What is the VDP?

The VDP offers taxpayers an opportunity to proactively correct past errors in their tax filings. When a submission is accepted, it can result in significant relief from penalties and interest. There are important conditions that must be met for a successful submission.

What’s changing?

The CRA’s updates affect several aspects of the program, including:

• The type of disclosures that qualify.
  • Broadens the definition of what is voluntary by creating new categories for ‘prompted’ and ‘unprompted’ disclosures.
  • Submissions for errors or omissions that do not have penalties but give rise to interest will now be accepted.
• The relief available.
  • Interest relief can now be up to 25 percent for ‘prompted’ disclosures and 75 percent for ‘unprompted’ disclosures.
  • Penalty relief is 100 percent for ‘unprompted’ disclosures and up to 100 precent relief for ‘prompted’ disclosures.

While generally framed differently, the other conditions for a complete voluntary disclosure appear to be unchanged:

• The application must be complete
• The application must include information that is more than one year past due
• There must be a payment of the estimated tax owed at the time of the application

Completeness remains key

To qualify under the VDP, a submission must be complete. It should include all known errors and omissions. This means that all relevant transactions and filing positions for the years covered must be carefully reviewed and well documented.

To help ensure eligibility for relief, it’s important to provide complete and timely information, as incomplete details or newly identified issues can affect the outcome.

Voluntary nature of the submission

Eligibility under the VDP generally requires that the disclosure be voluntary. If the CRA or another authority has already initiated an audit or investigation involving the taxpayer or a related person, the submission may no longer qualify for relief.

However, under the new rules, there is increased flexibility.

• Disclosures may still qualify for some relief from penalties and interest as ‘prompted’ disclosures if the CRA has some prior knowledge of potential non-compliance (i.e., from third-party sources).
• A submission may also be considered voluntary but ‘prompted’ when it follows communication from CRA identifying specific errors or omissions or setting a deadline to correct them.
• A disclosure can still be considered ‘unprompted’ when there is an education letter or a notice offering general guidance and filing information.

This flexibility means that even if you’ve received some form of CRA correspondence, it’s still worth reviewing your situation with an advisor to see if a VDP submission is an option.

Other considerations

The VDP offers taxpayers a valuable chance to correct past errors, but it’s not intended for repeated use. The CRA may consider a taxpayer’s subsequent application under the VDP if it relates to a different matter or if the circumstances were beyond the taxpayer’s control. This is a more flexible approach than in the past where taxpayers had to meet both conditions.

In addition, the CRA still has the ability to review or audit these years in the future regardless of a disclosure’s acceptance under the VDP. This makes it important to ensure that all relevant information is provided as completely and accurately as possible.