The Canada Revenue Agency (CRA) has announced changes to its Voluntary Disclosures Program (VDP) that will take effect on October 1, 2025. These changes reshape how taxpayers can come forward to correct errors or omissions in their tax filings.
Background: The Voluntary Disclosures Program (VDP)
The VDP provides taxpayers with an opportunity to proactively correct inaccurate or incomplete information in their past tax filings, or to disclose income and assets that were previously unreported. In exchange for voluntary disclosure, the CRA may provide relief from penalties and partial relief from interest, provided the taxpayer meets the program's conditions. Historically, the program has offered different levels of relief depending on the circumstances of the disclosure.
What's Changing?
No More "Limited Program"
Previously, the CRA had a category that offered reduced relief for taxpayers it considered more sophisticated or intentional in their mistakes. That category is now gone.
Two New Categories of Relief
- General Relief (Unprompted):
If you come forward before the CRA contacts you, you could receive up to full penalty relief and up to 75% relief on interest. Even if you've received a general education or reminder letter, your disclosure may still qualify. - Limited Relief (Prompted):
If the CRA has already raised a specific concern with you, you may still receive full penalty relief but only up to 25% interest relief.
Documentation You'll Need
- 10 years of records for foreign income or assets
- 6 years of records for Canadian income or assets
- 4 years of records for GST/HST
Why This Matters
If you've been considering a voluntary disclosure, timing is key. Applications made before October 1, 2025, will be reviewed under the current rules. After that date, the new relief categories will apply. If you think you may need to make a disclosure, it's best to start the process early.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
