Compliance
How to Leverage the New CRA Voluntary Disclosures Program (VDP) Changes
Recent changes to Canada’s Voluntary Disclosures Program make retroactive compliance simpler — here’s how to use the updated relief tiers and eligibility to your advantage.
By NomadicTax Research Team • 5-8 min read • November 21, 2025
## What’s Changed as of October 1, 2025
The Canada Revenue Agency (CRA) updated the **Voluntary Disclosures Program (VDP)** to make it more accessible and fair. Key changes include a **simplified application form**, **expanded eligibility**, and **new relief tiers**, drawing clear lines between unprompted and prompted disclosures. ([canada.ca](https://www.canada.ca/en/revenue-agency/programs/about-canada-revenue-agency-cra/compliance/voluntary-disclosures-program/changes-vdp.html?utm_source=openai))
## Eligibility: Who Can Participate?
- Individuals, corporations, trusts, partnerships, and GST/HST registrants etc. are eligible now, provided certain conditions are met. ([canada.ca](https://www.canada.ca/en/revenue-agency/programs/about-canada-revenue-agency-cra/compliance/voluntary-disclosures-program/eligible-vdp.html?utm_source=openai))
- **Excluded**: those currently under audit or investigation, or with egregious or intentional non-compliance. ([canada.ca](https://www.canada.ca/en/revenue-agency/programs/about-canada-revenue-agency-cra/compliance/voluntary-disclosures-program/changes-vdp.html?utm_source=openai))
## Relief Tiers: Unprompted vs Prompted Disclosures
| Type of Application | Interest Relief | Penalty Relief |
|----------------------|------------------|------------------|
| **Unprompted** (no prior communication from CRA) | 75% interest relief | 100% penalty relief ([canada.ca](https://www.canada.ca/en/revenue-agency/programs/about-canada-revenue-agency-cra/compliance/voluntary-disclosures-program/changes-vdp.html?utm_source=openai)) |
| **Prompted** (CRA raised an issue) | 25% interest relief | Up to 100% penalty relief ([canada.ca](https://www.canada.ca/en/revenue-agency/programs/about-canada-revenue-agency-cra/compliance/voluntary-disclosures-program/changes-vdp.html?utm_source=openai)) |
## Timeframes & Documentation Requirements
- **Canadian-sourced income or assets**: most recent 6 years. ([canada.ca](https://www.canada.ca/en/revenue-agency/programs/about-canada-revenue-agency-cra/compliance/voluntary-disclosures-program/changes-vdp.html?utm_source=openai))
- **Foreign-sourced income/assets**: most recent 10 years. ([canada.ca](https://www.canada.ca/en/revenue-agency/programs/about-canada-revenue-agency-cra/compliance/voluntary-disclosures-program/changes-vdp.html?utm_source=openai))
- GST/HST-related periods: most recent 4 years under the updated memorandum. ([canada.ca](https://www.canada.ca/en/revenue-agency/programs/about-canada-revenue-agency-cra/compliance/voluntary-disclosures-program/changes-vdp.html?utm_source=openai))
## Practical Steps to Apply Properly
1. Decide which tier applies: Were you prompted by CRA or not?
2. Gather all necessary documents for the required years (6 or 10 years).
3. Fill out **Form RC199**, making sure to include full details about the errors or omissions. ([canada.ca](https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/ic00-1/ic00-1r7-voluntary-disclosures-program.html?utm_source=openai))
4. Include estimated tax owing or request a payment arrangement. ([canada.ca](https://www.canada.ca/en/revenue-agency/programs/about-canada-revenue-agency-cra/compliance/voluntary-disclosures-program/eligible-vdp.html?utm_source=openai))
5. Submit via CRA’s “Submit documents online” portal. Mail or fax in exceptional cases. ([canada.ca](https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/ic00-1/ic00-1r7-voluntary-disclosures-program.html?utm_source=openai))
## Example Scenario
Suppose **Maria**, a self-employed consultant, discovers she didn't report some consulting income for two years (Canadian-sourced). She received an **educational letter** from the CRA, alerting her to possible issues.
- Because she was **prompted**, she applies under the **prompted relief tier**, so she’d be eligible for **25% interest relief** and up to **100% penalty relief**, assuming she meets documentation requirements.
- She includes 6 years of Canadian-sourced income details (even though only two years have omissions) and any foreign income over the past 10 years (if applicable).
- She submits Form RC199, includes the owed taxes, pays or requests payment arrangement, and labels her application properly.
## Actionable Advice
- Don't wait until an audit — unprompted applications provide much better relief.
- Keep excellent financial records, especially for foreign income or assets.
- Involve a tax professional when evaluating eligibility or gathering documentation — mistakes can delay relief.
- Monitor CRA communications: education letters may trigger eligibility.