Voluntary Disclosures Program (VDP)

Conditions for relief

The CRA’s current policy applies to applications received on or after October 1, 2025. The application must be voluntary, so it cannot be made after an audit or investigation has begun on the information you are disclosing. It must relate to a tax year at least one year past its filing due date, and it must involve an error or omission that carries interest, penalties or both.

You must also provide the supporting documents the CRA asks for, answer follow-up requests promptly and include payment of the estimated tax owing or ask for a payment arrangement. Some situations are excluded, such as returns that produce a refund or no tax owing, or a request to cancel penalties and interest that were already assessed.

What relief can be granted

The October 2025 changes widened eligibility, and an application made after general guidance such as an education letter is generally treated as unprompted. The level of relief now depends on whether the application is unprompted or prompted. An unprompted application normally receives 75% relief of the interest and 100% relief of the penalties. A prompted application, made after the CRA has identified a specific issue, normally receives 25% relief of the interest and up to 100% relief of the penalties.

Relief is discretionary, so the CRA is not required to grant it. There is no right of objection to a VDP decision, although you can request a second administrative review in writing.

An illustrative example

Suppose, for illustration, a freelancer realizes two years of side income went unreported, and the correction would carry $1,000 of interest and $2,000 of penalties. If the application is unprompted and accepted, the CRA would normally cancel $750 of the interest and all $2,000 of the penalties, and the freelancer would still pay the tax and the remaining $250 of interest. If the CRA had already sent a letter naming the specific problem, the same application would normally receive 25% interest relief, $250, and up to the full penalty relief. The numbers are round and only show how the percentages work.

How to apply

Complete Form RC199 and include the supporting returns, forms and schedules needed to correct the issue. In general that means the most recent six years, or ten years for income or assets outside Canada, and four years for GST/HST. Years with no errors do not need to be included. Name any adviser who helped with the original matter, and disclose all known errors, including those involving related parties.

Submit the form through the CRA’s Submit documents online service in your CRA account, or by mail or fax. If you are unsure, you can request an anonymous pre-disclosure discussion first; it is informal and not binding. An accountant can prepare the corrected returns and act as your authorized representative.