CRA Voluntary Disclosure Program: A Practical Path Back to Compliance

Last updated: Nov 12, 2025

Tax situations don’t always unfold the way they should. Sometimes a return gets missed, income goes unreported, or a foreign asset slips through the cracks. These issues can sit quietly for years, but for many taxpayers there comes a point where the risk of penalties, interest, and a potential audit becomes too significant to ignore. For those moments, the Canada Revenue Agency’s Voluntary Disclosures Program (VDP) offers a structured and constructive way to correct past non-compliance.

The VDP is designed to encourage taxpayers to come forward before the CRA initiates any audit or enforcement action. When an application meets the program’s criteria, the CRA may grant relief from penalties, provide partial interest relief, and confirm that the taxpayer will not face criminal prosecution for the matters disclosed. While taxes owed must still be paid in full, the reduction in penalties and the clarity moving forward often make the VDP an attractive option for individuals and businesses seeking a clean slate.

To qualify, a disclosure must be voluntary, complete, involve a matter that would normally trigger a penalty, relate to information at least one year past its original filing deadline, and be accompanied by payment or a reasonable payment arrangement. These conditions exist to ensure that the process benefits taxpayers who genuinely seek to correct past errors, rather than those responding to an active audit or enforcement action. The CRA’s updated guidelines also allow for more flexibility than in previous years, allowing certain taxpayers to apply even if they’ve received prior compliance communications.

Many situations fall under the VDP umbrella. Unfiled returns, unreported domestic or foreign income, errors in claiming expenses, GST/HST reporting issues, failure to file a T1135, or mistakes in payroll obligations are all common examples. In each case, the program provides a measured way to bring outstanding issues to light and resolve them efficiently. That said, not every matter qualifies — issues involving refund claims, ongoing audits, or changes to previously filed elections typically fall outside the VDP’s scope.

For taxpayers unsure about their eligibility, the CRA offers a pre-disclosure discussion service. This allows you or your representative to speak with the CRA anonymously to understand how the program might apply to your situation. While non-binding, these conversations can help clarify the potential risks and benefits of filing a formal application.

In practice, preparing a strong VDP submission requires thoughtful analysis. Each disclosure must be complete, accurate, and supported by documentation. The narrative provided to the CRA should explain the circumstances clearly without undermining the taxpayer’s position. Payment estimates must be calculated carefully, especially where multiple years or cross-border reporting are involved. A well-prepared submission increases the likelihood of acceptance and ensures the taxpayer receives the maximum available relief.

For clients facing past filing issues, the VDP often provides the most reliable pathway back to compliance. It allows taxpayers to correct mistakes with reduced financial exposure and without the stress of ongoing uncertainty. As a firm specializing in domestic and cross-border compliance, we routinely support individuals and businesses through this process — from the initial assessment to preparing the disclosure, estimating the tax liability, and communicating with the CRA on their behalf.

If you believe you have unfiled returns, unreported income, or past reporting obligations that need to be corrected, the Voluntary Disclosures Program may be the right solution. A confidential review can help determine whether your situation qualifies and outline the potential benefit of moving forward under the VDP’s framework.