Compliance
Voluntary Disclosures Program Gets a Major Overhaul: How to Take Advantage
Starting October 1, 2025, CRA’s Voluntary Disclosures Program will become more accessible—understanding these changes can help individuals and businesses clear past tax issues efficiently.
By NomadicTax Research Team • 5-8 min read • November 23, 2025
## What Is the VDP and What’s Changing?
The **Voluntary Disclosures Program (VDP)** allows taxpayers to proactively correct past unintentional tax errors or omissions. The changes taking effect **October 1, 2025** aim to simplify the process and broaden who qualifies. ([canada.ca](https://www.canada.ca/en/revenue-agency/news/newsroom/tax-tips/tax-tips-2025/mistake-on-taxes-changes-voluntary-disclosures-program.html?utm_source=openai))
Key policy shifts include:
- **Increased eligibility**: Taxpayers who received an *educational letter* from CRA about a possible non-compliance issue (e.g. unreported income or ineligible expense claim) may 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?utm_source=openai))
- **Updated relief levels**:
• *Unprompted applications*: no previous communications from CRA → eligible for **75% interest relief** and **100% penalty relief**.
• *Prompted applications*: after a communication → **25% interest relief**, up to **100% penalty 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?utm_source=openai))
- **Simplified application process and language**, including clearer forms. ([canada.ca](https://www.canada.ca/en/revenue-agency/news/newsroom/tax-tips/tax-tips-2025/mistake-on-taxes-changes-voluntary-disclosures-program.html?utm_source=openai))
- **Reduced document burdens**: For foreign-sourced income/assets, the required look-back period is trimmed to 10 years; for Canadian-sourced income/assets, 6 years. GST/HST related info is limited to 4 years for applications on or after October 1, 2025. ([canada.ca](https://www.canada.ca/en/revenue-agency/news/newsroom/tax-tips/tax-tips-2025/mistake-on-taxes-changes-voluntary-disclosures-program.html?utm_source=openai))
## Who Should Consider Using the VDP?
- Individuals or businesses who have **unreported foreign income or foreign assets** and wish to come clean.
- Taxpayers who received a communication from CRA indicating a potential non-compliance, but want to avoid penalties and interest.
- Businesses reviewing past GST/HST submissions suspecting errors.
- Anyone uncertain of compliance status wanting to reduce risks before an audit or CRA notice.
## Practical Tips for Applying Successfully
1. **Act early**—apply soon after becoming aware of a possible issue rather than waiting.
2. Ensure your disclosure is **voluntary**—no audit or objection should be underway related to the matter. ([canada.ca](https://www.canada.ca/en/revenue-agency/news/newsroom/tax-tips/tax-tips-2025/mistake-on-taxes-changes-voluntary-disclosures-program.html?utm_source=openai))
3. Gather accurate information spanning the appropriate look-back years. Foreign vs domestic assets differ.
4. Calculate what you owe (taxes, interest, penalties) and be prepared to pay or request arrangements.
5. Clearly indicate whether it’s “prompted” or “unprompted”—notice matters for relief available.
6. Keep complete documentation; transparency helps speed up processing and approval.
## Potential Challenges and Considerations
- If CRA begins audit/investigation before your application, you may no longer be eligible.
- An amended return or reassessment may be required if prior returns included amounts that now become non-taxable (e.g., CCRSB rebates).
- Be careful with timing: required filing deadlines and look-back periods differ for foreign income and GST/HST components.
- Professional advice is often worthwhile to avoid missteps and maximize relief.
## Example Scenario
Suppose *Company A* has CCPC status and discovers it didn’t claim the CCRSB in 2020-21. It received no letters from CRA until now. It files under **unprompted application** and may qualify for **75% interest relief** and **fully waived penalties**—subject to providing required documentation back 10 years for foreign income, etc. If Company A waits until after an educational letter, they’d receive less interest relief (25%) but still could fully remove penalties for most years.
## Summary
As of **October 1, 2025**, the VDP changes offer an unprecedented opportunity to resolve tax mistakes with more certainty and less financial pain. Whether you’re a business or an individual, not ignoring past issues and following proper process can mean the difference between significant savings and costly consequences.