There’s good news for Canadians who may have accidentally or unwillingly made a mistake on their taxes in the past.
Starting October 1, 2025, the Canada Revenue Agency (CRA) will roll out changes to its Voluntary Disclosures Program (VDP). This initiative is designed to help taxpayers correct past mistakes without facing the full brunt of penalties and interest that non-compliance would typically bring about.
The revamped program aims to expand eligibility, simplify the application process and update the levels of relief available. The CRA says the changes are aimed at making it easier for Canadians to fix unintentional errors while still ensuring fairness for those who have complied with the rules from the beginning.
“The Voluntary Disclosures Program (VDP) allows for well-intentioned taxpayers to voluntarily correct their tax affairs and receive some financial relief,” the CRA said in a recent statement.
What’s changing to voluntary disclosure with the CRA
The most significant update to the VDP is broader eligibility. Taxpayers who receive compliance-related letters — for example, regarding potential unreported income — will now still be able to apply. Previously, those who had been contacted by the CRA were often locked out of the program.
The CRA emphasizes, however, that individuals or businesses already under audit or investigation will remain ineligible.
The rules around financial relief are also changing, with applications split into two categories:
- Unprompted applications: If you come forward on your own, before hearing from the CRA, you could qualify for 75% interest relief and 100% penalty relief
- Prompted applications: If you apply after receiving a compliance communication, you may still receive 25% interest relief and up to 100% penalty relief
On top of that, the CRA has streamlined the application process, with rewritten policies aimed at ensuring the documentation is written in plain language. The paperwork requirements are also set to be simplified, and electronic applications will make it easier to disclose past errors without getting bogged down in forms.
How to apply under new VDP rules
To qualify for the program, a taxpayer’s application must meet strict conditions. It has to be voluntary, complete and involve information at least one year past its filing deadline. Applicants are also expected to put forth a payment or a payment arrangement for the estimated tax owing, according to the CRA’s statement.
For disclosures that cover multiple years, the CRA requires supporting documents that go back a set number of years depending on the type of income:
- 10 years for foreign-sourced income or assets
- 6 years for Canadian-sourced income or assets
- 4 years for GST/HST-related information
For those who are unsure whether the VDP is suitable for their particular circumstances, the CRA does offer an anonymous pre-disclosure call service, where taxpayers can talk through their situation with a CRA official before deciding whether to file a formal application.
The CRA stresses that the VDP is about encouraging compliance, not rewarding non-compliance. Those who act early and voluntarily will benefit most — as reflected in the new, updated relief rates.
For taxpayers who made honest mistakes, the upcoming changes could make the process of setting things right less intimidating and more importantly, far less costly.
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
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