The Voluntary Disclosure Program (“VDP”) serves as an important mechanism that enables taxpayers to voluntarily correct unintentional filing errors or omissions. Under the current program, taxpayers may be granted limited relief from interest, penalties, or potential prosecution, provided that specific conditions are satisfied. However, the program’s restrictive eligibility criteria have limited access for certain taxpayers.
On September 10, 2025, the Canada Revenue Agency (“CRA”) announced significant enhancements to the VDP, aimed at expanding the eligibility criteria and providing greater relief from interest and penalties. There are also similar new changes announced for the GST/HST Voluntary Disclosure Program.
The revised policy will apply to voluntary disclosures submitted on or after October 1, 2025, while disclosures received prior to that date will continue to be governed by the previous policy.
Changes Under the New Policy
Expanded Eligibility Criteria
Before the upcoming changes came into effect, the VDP’s eligibility criteria were relatively narrow. Under the current policy, disclosure would not be considered voluntary if the CRA had already initiated enforcement action against the taxpayer or a person associated with or related to the taxpayer. As a result, taxpayers would be automatically disqualified from making a voluntary disclosure if they were subject to any of the following CRA enforcement actions:
- Audits and investigations conducted by the CRA;
- Communications from the CRA regarding requests or demands for unfiled returns or “other tax affairs”; or
- Communications from a CRA employee concerning non-compliance matters.
Under the revised guidelines, the previous “general” and “limited” program streams have been replaced with two new categories: “unprompted” and “prompted” applications.
- "Unprompted" applications will generally arise where:
- No verbal or written communication has been made by the CRA regarding the compliance issue; or
- The CRA has issued only an educational letter or notice providing general guidance and filing information regarding the compliance issue.
- "Prompted" applications will generally arise where:
- A VDP application is submitted after the CRA has issued a verbal or written communication regarding a specific compliance issue; or
- A VDP application is submitted after the CRA has received information from a third-party source regarding the taxpayer’s potential non-compliance.
We noted that, with the expanded eligibility criteria under the new policy, receiving communications from the CRA no longer automatically disqualifies a taxpayer from making a voluntary disclosure. Instead, such applications may now be processed under the “prompted” category and be granted limited relief from interests and penalties. However, taxpayers remain ineligible to make a disclosure where non-compliance is already under a CRA audit or investigation.
Greater relief
The current policy provides limited penalties and interest reliefs. The previous “General Program” granted full penalty relief but only 50% interest relief in respect of years preceding the three most recent taxation years. Further, the previous “Limited Program” granted only relief from gross negligence penalties, with no interest relief available.
The CRA has provided greater relief under the revised policy:
- "Unprompted" applications are eligible for 75% relief of applicable interest and 100% relief of applicable penalties; and
- "Prompted" applications are eligible for 25% relief of applicable interest and up to 100% relief of applicable penalties.
GG Observations
In conclusion, the revised VDP rules broaden eligibility, allowing certain taxpayers who may not have qualified under the current program to now make a voluntary disclosure. Taxpayers who have identified unintentional errors or omissions in prior tax filings are strongly encouraged to take advantage of these changes to bring their filings into compliance. In some cases, it may be beneficial to consider deferring a VDP application until the new program takes effect on October 1, 2025, which may provide greater relief.
For further information on correcting prior-year tax reporting through the VDP applications, please contact our office for assistance.
