What Is the VDP & What’s New
The Voluntary Disclosures Program (VDP) allows taxpayers to come forward, correct past mistakes (like unreported income or ineligible credits), and receive relief from penalties and interest. As of October 1, 2025, the program has been updated to improve fairness, accessibility, and clarity. (canada.ca)
Key Updates at a Glance
| Area | Before | After October 1, 2025 |
|---|---|---|
| Eligibility | Only taxpayers who made corrections before any CRA communication. | Eligible even if you received communications (e.g. educational letters) from CRA about possible non-compliance—unless you’re under audit or investigation or non-compliance was intentional/egregious. (canada.ca) |
| Relief from interest & penalties | Typically limited relief for prompted disclosures. | Two categories: |
- Unprompted applications (no prior notice): up to 75% interest relief, 100% penalty relief;
- Prompted applications: up to 25% interest relief, up to 100% penalty relief. (canada.ca) | | Timeframes / Documentation | Different time spans for foreign & Canadian sourced income/assets. | You must include last 10 years of foreign-sourced income or assets, last 6 years of Canadian-sourced ones. GST/HST related info limited to most recent 4 years starting October 1. (canada.ca) |
Example Cases
Case 1: A freelancer who missed income from foreign clients
- Received a letter from CRA suggesting under-reporting income. Now can come forward under VDP (prompted disclosure), get up to 25% interest relief, and may eliminate penalties entirely. Must include foreign income records from past 10 years.
Case 2: A corporate director unaware that certain expenses weren’t eligible and failed to report them in past tax years
- If this was unintentional and not under audit, the company could submit for unprompted correction: 75% interest relief, full penalty relief. Records covering Canadian income/assets for past 6 years etc.
How to Apply & What to Expect
- Review eligibility—ensure you’re not under audit or that non-compliance wasn’t egregious or intentional.
- Collect your financial info for required years (Canadian, foreign, GST/HST details).
- Complete and submit your VDP application via CRA’s form/process (currently through CRA website).
- Include full payment or a payment plan for tax owing, interest or both if required.
Do Your Homework
- Be complete—omitting items can delay or disqualify your application.
- Keep documentation transparent and organized.
- Seek professional tax advice if unsure whether behavior may be considered intentional or egregious.
Why It Matters
- Avoid audits or penalties: Using VDP proactively can reduce penalties and interest significantly.
- Peace of mind: You’ll meet obligations as Canadian law transparently expects.
- Better financial outcomes: Relief can often mean fewer dollars owed and less stress.
Call to Action
Have a tax year in which you suspect mistakes or omissions? Don’t wait—VDP’s updated framework may provide generous relief. Start documenting, check deadlines, and consider consulting a tax professional to submit the cleanest possible disclosure.