Compliance
Maximizing Relief: How to Use Canada’s Enhanced Voluntary Disclosures Program (VDP) Under the New Rules
With sweeping changes effective October 1, 2025, the CRA’s Voluntary Disclosures Program offers greater access and clearer relief for those correcting tax filing errors. Discover exactly what changed, what kinds of relief are available, and how to make sure you qualify.
By NomadicTax Research Team • 5-8 min read • November 22, 2025
## What’s New in the Voluntary Disclosures Program (VDP)
Canada’s VDP has been revamped effective **October 1, 2025**, to make it easier for taxpayers and registrants to correct unintentional errors or omissions in tax filings. ([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)) Key changes include:
- **Simplified application form (Form RC199)** with clearer instructions. ([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))
- **Increased eligibility**, now including those who have been _prompted_ by CRA communications (like an education letter) about potential 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))
- **Two tiers of relief**: _general relief_ (for unprompted applications) giving **75% interest relief + 100% penalty relief**, and _partial relief_ (for prompted applications) giving **25% interest + 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))
- **Document requirements updated**: for foreign income/assets, last **10 years**; Canadian-sourced income, last **6 years**; for GST/HST, the last **4 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))
## Who Qualifies—and Who Doesn’t
Relief is available to:
- Individuals, employers, corporations, trusts, partnerships. ([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))
- GST/HST registrants, excise or license registrants. ([canada.ca](https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/16-5-1/voluntary-disclosures-program.html?utm_source=openai))
Not eligible if:
- You are under audit or investigation regarding the issue you're disclosing. ([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))
- You were egregiously non-compliant or intentionally avoided tax. ([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))
## Actionable Steps for Taxpayers
Here’s what to do if you believe you’d benefit under the new VDP rules:
1. **Gather documentation** pertaining to the relevant period, depending on whether it’s foreign income/assets, Canadian income, or GST/HST. Use up to 10, 6, or 4 years respectively. ([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))
2. **Identify whether your disclosure is prompted or unprompted**. If the CRA contacted you, that's prompted; if not, it may be unprompted. This affects relief levels. ([canada.ca](https://www.canada.ca/en/revenue-agency/programs/about-canada-revenue-agency-cra/compliance/voluntary-disclosures-program/how-apply-vdp.html?utm_source=openai))
3. **Complete Form RC199** accurately, including necessary returns, schedules, and full disclosure. ([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. **Submit the application** via:
- CRA ``MyAccount`` or ``MyBusinessAccount`` (online)
- Fax
- Mail to the Shawinigan National Verification and Collections Centre ([canada.ca](https://www.canada.ca/en/revenue-agency/programs/about-canada-revenue-agency-cra/compliance/voluntary-disclosures-program/how-apply-vdp.html?utm_source=openai))
5. **Include payment** of the amount owing or request a payment arrangement. Even with relief, taxes owed plus part of the interest (depending on whether unprompted or prompted) must be paid. ([canada.ca](https://www.canada.ca/en/revenue-agency/programs/about-canada-revenue-agency-cra/compliance/voluntary-disclosures-program/how-apply-vdp.html?utm_source=openai))
## Real-World Examples
- *Example 1*: Jane, an employee, omits reporting some freelance income from years past. She receives an education letter from CRA in 2025. She uses VDP and gets **partial relief**: 25% off interest, penalties waived. Documentation required: 6 years of Canadian income data.
- *Example 2*: Acme Corp discovers it under-claimed GST/HST credits unintentionally. No CRA communication yet. They apply under VDP unprompted, presenting 4 years of GST records. Relief granted: 75% interest relief, full penalty relief. Must pay the over-debit plus part of interest.
## Caveats & Tips
- Don’t wait until audit or investigation starts—you’ll lose eligibility.
- Be thorough: incomplete documentation delays approval or results in denial.
- Once relief is granted, maintain compliance—future missteps can affect perception.
- Use these changes proactively—many taxpayers didn’t know prompted eligibility was possible before.
## Summary
The revised VDP rules offer meaningful new pathways to correct past tax mistakes with less financial pain—lower penalties, lower interest—for both individuals and businesses. If you qualify, these changes make voluntary disclosure a much more workable solution. If in doubt, seek professional advice to assess whether you are prompted vs unprompted, gather the right docs, and set yourself up properly.