The Voluntary Disclosures Program (VDP) is how CRA lets a taxpayer correct past filings in exchange for relief from penalties and part of the interest. The program changed on October 1, 2025, and the changes matter most to corporations that are behind: relief now depends on whether CRA contacted you first.
What is the Voluntary Disclosures Program?
It’s a CRA program for correcting errors or omissions, including returns that were never filed. If an application is accepted, CRA can reduce the penalties and interest that would otherwise apply and won’t refer the disclosed matter for criminal prosecution. It never forgives the tax itself: you still owe everything you always owed.
How much relief does the VDP give?
Since October 1, 2025, it depends on whether your application is unprompted or prompted:
- Unprompted (general relief): 100% relief of the applicable penalties and 75% relief of the applicable interest.
- Prompted (partial relief): up to 100% relief of the applicable penalties and 25% relief of the applicable interest.
The gap between 75% and 25% interest relief is why timing matters. On a multi-year corporate catch-up, interest can be a large share of the balance.
What makes an application “prompted”?
An application is unprompted when CRA hasn’t communicated with you about an identified compliance issue. It still counts as unprompted if CRA only sent an education letter or general guidance.
It becomes prompted when it follows communication about a specific issue. That includes letters that identify errors, or that set a deadline to file or comply. A demand to file, for example, sets a deadline and expects you to file.
Who is eligible for the VDP?
According to CRA, an application has to meet five conditions:
- It’s made before an audit or investigation has begun against you or a related taxpayer.
- It’s complete, with all the relevant information for the years or periods involved.
- It involves an error or omission that carries interest or penalties.
- The information is at least one year, or one reporting period, past due.
- It includes payment of the estimated tax owing, or a request for a payment arrangement, which CRA has to approve.
Applications are generally not accepted if they only involve returns that result in a refund or no amount owing, or if they ask for relief from penalties and interest that have already been assessed.
Complete means complete
You can’t disclose three of six unfiled years. An incomplete application can be rejected, and it will have told CRA where to look. In practice, the books have to be rebuilt before the application goes in, which is why a VDP file usually starts as a bookkeeping project.
What if you don’t qualify?
Once an audit or investigation has started, the VDP is closed for that matter. Taxpayer relief under subsection 220(3.1) of the Income Tax Act is a separate request. It covers extraordinary circumstances (such as serious illness or a natural disaster), financial hardship, or delays caused by CRA, and it reaches back ten calendar years. It’s discretionary, but it remains available when the VDP isn’t.
The practical takeaway
If you’re behind and CRA hasn’t written to you about it, you may qualify for the most relief the program offers. That can change with a single letter, which is why it pays to act before one arrives.
Sources: CRA, Changes to the Voluntary Disclosures Program; Who is eligible; Information Circular IC00-1R7. General information, not advice for your specific situation.
