Compliance
Compliance Alert: Changes to Voluntary Disclosures Program Taking Effect October 1, 2025
Canada’s Voluntary Disclosures Program is getting simpler, more accessible, and more generous for those correcting past tax errors starting October 1, 2025. Know the new rules.
By NomadicTax Research Team • 5-8 min read • November 24, 2025
## What Is the Voluntary Disclosures Program (VDP)?
The VDP allows taxpayers who have filed incomplete or incorrect returns to **voluntarily disclose**, pay what’s owed, and receive relief from penalties and interest, **if eligibility criteria are met**.([canada.ca](https://www.canada.ca/en/revenue-agency/news/newsroom/tax-tips/tax-tips-2025/mistake-on-taxes-changes-voluntary-disclosures-program.html?wbdisable=true&utm_source=openai))
## Key Changes Effective October 1, 2025
| Change | Description |
|--------|-------------|
| **Increased eligibility** | If you’ve received an *educational letter* from the CRA about potential non-compliance—like unreported income—you could now qualify.([canada.ca](https://www.canada.ca/en/revenue-agency/news/newsroom/tax-tips/tax-tips-2025/mistake-on-taxes-changes-voluntary-disclosures-program.html?wbdisable=true&utm_source=openai)) |
| **New relief levels** | *Unprompted applications* (no prior contact from CRA) get **100% penalty relief** and **75% interest relief**; *prompted applications* (after contact from CRA) eligible for **up to 100% penalty relief** and **25% interest relief**.([canada.ca](https://www.canada.ca/en/revenue-agency/news/newsroom/tax-tips/tax-tips-2025/mistake-on-taxes-changes-voluntary-disclosures-program.html?wbdisable=true&utm_source=openai)) |
| **Simplified process and documentation** | Clearer, more accessible instructions; reforms to forms and submission procedures to reduce complexity.([canada.ca](https://www.canada.ca/en/revenue-agency/news/newsroom/tax-tips/tax-tips-2025/mistake-on-taxes-changes-voluntary-disclosures-program.html?wbdisable=true&utm_source=openai)) |
| **Expanded look-back periods** |
| • Foreign-sourced income/assets: most recent **10 years** |
| • Canadian-sourced income/assets: most recent **6 years** |
| • GST/HST related info (after Oct 1): **4 most recent years** required.([canada.ca](https://www.canada.ca/en/revenue-agency/news/newsroom/tax-tips/tax-tips-2025/mistake-on-taxes-changes-voluntary-disclosures-program.html?wbdisable=true&utm_source=openai)) |
## Who Should Take Note / Where Risks Are Rising
* Individuals with overseas income or unreported foreign assets. The 10-year window makes disclosure more consequential now.
* Businesses that had compliance communications from CRA—like audit warnings, compliance letters, etc. Under prompted applications, interest relief is significantly less.
* Taxpayers concerned about historical errors—VAT/GST/HST, misreported business income, etc. The risk of audit or reassessment increases when obligations are not corrected proactively.
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## Example Scenarios
1. **Self-employed person** received an educational letter about missing income 3 years ago, but has not filed. They submit a prompted VDP disclosing, pay owed tax, receive **up to 100% penalty relief**, 25% interest relief.
2. **Individual who never heard from CRA**, discovered they missed claiming foreign investment income 8 years ago. A voluntary disclosure (unprompted) offers **100% penalty relief** and **75% interest relief**—this can significantly reduce cost of catching up.
3. **Business over several years** filed GST/HST incorrectly. They gather required documentation for 4 years, submit disclosure informed by new simplified process, apply for unprompted submission if they have not been contacted.
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## Action Plan for Taxpayers
* If you’ve missed income/reporting years, begin gathering documentation early—foreign and Canadian sources.
* Monitor educational letters or CRA communications; they affect whether your application is “prompted” or “unprompted.”
* Calculate interest & penalties under both paths to assess which approach yields the lowest net cost.
* Retain professional help if foreign income/assets involved or multiple years in question—the rules can get complex.
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## Compliance Tips for Professionals and Advisors
* Train clients about implications of CRA education letters—not just adverse but triggers for lower relief.
* Maintain excellent record keeping, especially for foreign asset/income disclosures.
* Review return and notice-filing protocols for GST/HST to prepare for look-back documentation.
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**Overall**, the updated VDP will be a far more appealing path for many taxpayers who want to come clean on past errors. It rewards proactive disclosure and could greatly reduce the sting of penalties—for those who engage before CRA opens investigations or audits.