Changes to the Voluntary Disclosure Program
History and Context
The purpose of the CRA’s Voluntary Disclosure Program (“VDP”) is to promote “voluntary compliance” and encourage taxpayers to come forward and correct previous errors and omissions in their tax filings.[1] It has also been described as a “fairness program” by offering an “opportunity for clients to self-correct.”[2] The VDP was introduced in 1973 and provides relief from prosecution, penalties, and interest for the 10 years before the application is filed for “taxpayers who made a complete and voluntary disclosure”.[3]
Since 1973, the program has undergone several revisions, including those effective March 2018, and most recently in October 2025.[4] The changes introduced in March 2018 greatly restricted the VDP’s scope and the decision was “politically driven by disclosures about offshore tax havens, as revealed by the Panama Papers and other document leaks.”[5]
Restricting the VDP’s scope led to fewer taxpayers voluntarily correcting their tax filings. The changes introduced in October 2025 attempt to counteract this drop by relaxing the voluntariness requirement and providing greater interest and penalty relief under the new “Prompted” and “Unpromoted” categories.[6]
Under the new rules, the completeness requirement and the 10-year limitation period still apply and remain largely unchanged.[7] Accordingly, to limit exposure to interest and penalties from a denied application, taxpayers should disclose all non-compliance from all tax years, even if it leads to the taxpayer owing penalties on errors more than 10 years in the past.[8]
The VDPs’ new rules are outlined in CRA’s Information Circular IC00-1R7 for the Income Tax Act and GST/HST Memorandum 16-5-1 for the Excise Tax Act.[9] The two programs are largely the same.[10]
Issues with the Prior VDP
The VDP’s changes in March 2018 introduced the Limited program, which only provided amnesty from criminal prosecution and gross negligence penalties.[11] The General program provided this same amnesty, plus 50% interest relief.[12] Accordingly, the March 2018 amendments created several issues:
Limited relief to taxpayers
Risk of no interest relief if CRA deemed a taxpayer ineligible for the General Program[13]
Automatically disqualified if the taxpayer had received a CRA Education Letter[14]
High costs to the Government to administer the program.[15]
Taken together, these issues led to fewer taxpayers voluntarily correcting their tax filings and remitting taxes owed on prior errors or omissions. [16]
Changes to IC00-1R7
A. Relaxing the Voluntary Requirement
CRA will only accept a VDP application if the taxpayer is disclosing their error on their own volition.[17] Before October, VDP applications were disqualified if made after any CRA “enforcement action”.[18] The broad scope of an enforcement action included examinations, demands for unfiled returns, or any other direct contact from a CRA employee regarding non-compliance.[19]
The new rules have relaxed the requirements for a valid voluntary disclosure.[20] Generally, disclosures will now be “voluntary” so long as CRA has not initiated an audit or investigation in respect of the information being disclosed.[21] Accordingly, communications from the CRA will not automatically disqualify a taxpayer from the VDP.[22] Instead, taxpayers contacted by CRA may be categorized into the new “Prompted” category.[23]
B. New Categories:
The new “Unprompted” and “Prompted” categories both provide full penalty relief, partial interest relief, and no CRA referral for criminal prosecution.[24] Unpromoted applications are eligible for 75% interest relief, while Prompted applications are eligible for 25% interest relief.[25]
An application falls into the Unprompted category if the taxpayer had no prior communication with the CRA on an identified compliance issue before applying.[26] Further, a taxpayer may remain eligible if they applied after receiving an “education letter or notice that offers general guidance and filing information related to a particular topic.”[27]
For the Prompted category, a taxpayer may be eligible for relief under two scenarios. First, if the taxpayer applies after the CRA has communicated with them, verbally or in writing, about an identified compliance issue.[28] Second, if the taxpayer applies after the CRA has already received information from a third-party source about the non-compliance.[29]
C. Subsequent Disclosures:
As part of the March 2018 changes, CRA stipulated that each taxpayer would only be entitled to one voluntary disclosure in their lifetime.[30] Under the new rules, however, CRA may consider a subsequent application from a taxpayer if it relates to a “different matter than a previous application” or involves a circumstance beyond the taxpayer's control.[31]
What Has Not Changed? The “Completeness” Requirement and the 10-Year Rule
The downside that most often causes taxpayers to decide not to file a voluntary disclosure and hope that CRA never discovers their past errors is the 10-year limit. Since CRA does not have legislative authority to waive penalties or interest for tax years that are further back than 10 years, a taxpayer who discloses an error more than 10 years in the past is likely walking themselves into a penalty. [32] But a taxpayer who only discloses their errors in the past 10 years while staying mum on errors going back past 10 years risks CRA rejecting their voluntary disclosure and assessing them penalties and interest on all years containing the error, since CRA requires all disclosures to be “complete” in order to be valid.[33]
For taxpayers who have errors extending beyond 10 years, the new program does not remove this conundrum.[34]
Conclusion
The October 2025 changes mark a clear shift in making the VDP more accessible and enticing for taxpayers.[35] Although the completeness requirement and the 10-year limitation period remain, the new categories and relaxation of voluntariness provide greater flexibility and relief.[36] For taxpayers with past non-compliance, the new VDP offers a better way to correct errors, reduce exposure, and obtain relief from interest and penalties.[37]
Sources:
[1] Nicole Lynx and Chris Sprysak, "What Might the Next Steps Be in the Evolution of Canada’s Voluntary Disclosures Program?" in Pooja Mihailovich and John Sorensen, eds., Tax Disputes in Canada: The Path Forward (Toronto: Canadian Tax Foundation, 2022), at para 13, online: <https://taxfind.ca/ - /document/2022>
[2] Ibid at para 14.
[3] Ibid at para 2.
[4] Canada, CRA, Changes to the Voluntary Disclosures Program, at para 1, online: <canada.ca/en/revenue-agency/programs/about-canada-revenue-agency-cra>.
[5] Dean Beeby, “Tax Dodgers and Other Stampeded to Beat Amnesty Deadline in March” CBC (23 July 2018).
[6] Canada, CRA, Changes to the Voluntary Disclosures Program, at para 1, online: <canada.ca/en/revenue-agency/programs/about-canada-revenue-agency-cra>.
[7] CRA, Information Circular IC00-1R7, “Voluntary Disclosure Program” (10 September 2025) at paras 10, 23, 26, and 27.
[8] Ibid at para 10.
[9] Ibid at paras 4 – 6.
[10] CRA, GST/HST Memorandum 16-5-1, “Voluntary Disclosure Program” (10 September 2025) at paras 6 – 19.
[11] CRA, Information Circular IC00-1R6, “Voluntary Disclosure Program” (15 December 2017) at paras 6 – 18.
[12] Ibid
[13] CRA, supra note 12 at paras 14 and 16.
[14] Ibid at paras 30 – 31.
[15] Ari Rabinovitch, “Need to Disclose a Tax Mistake? The CRA says these Coming Changes Will Help”, The Global News (11 September 2025).
[16] Dean Beeby, supra note 5.
[17] CRA, supra note 7 at para 16.
[18] CRA, supra note 11 at paras 29 – 30.
[19] Ibid at paras 30.
[20] CRA, supra note 6 at paras 1 – 4.
[21] CRA, supra note 7 at paras 17.
[22] Ibid at para 20.
[23] Ibid.
[24] Ibid at paras 21 – 23.
[25] Ibid at para 21.
[26] Ibid at para 19.
[27] Ibid.
[28] Ibid at para 20.
[29] Ibid.
[30] CRA, supra note 11 at para 25.
[31] CRA, supra note 7 at para 12.
[32] Canada, CRA, Limitation Period on Exercising Discretion and the Deadline for Requesting Relief at para 1, online:<canada.ca/en/revenue-agency/services/about-canada-revenue-agency-cra/complaints>
[33] See generally Gauthier v Canada (National Revenue), 2017 FC 1173, at paras 1 – 6.
[34] Ibid.
[35] CRA, supra note 4.
[36] Ibid.
[37] Ibid.