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Published: March 4, 2020
Last Updated: July 6, 2026
Update — October 2025: The 2018 General Program and Limited Program have been replaced by general-relief and partial-relief tiers effective October 1, 2025. The original analysis of the 2018 changes is preserved below for historical context and is followed by a full account of the current rules.
2018 VDP Changes At a Glance:
The 2018 changes to the CRA’s Voluntary Disclosures Program introduced the General Program and Limited Program, required upfront payment of estimated taxes, and eliminated the no-name disclosure process. Those rules have since been substantially revised by the October 2025 overhaul.
This article preserves the original 2018 analysis and updates it to reflect the current state of the VDP.
The 2018 VDP Changes: Original Analysis
Background and Context
The 2018 changes under Information Circular IC00-1R6 came into effect on March 1, 2018. They introduced five eligibility conditions (adding upfront tax payment), split applications between the General and Limited Programs, eliminated the no-name disclosure process, and replaced it with a pre-disclosure discussion service.
The General Program
The General Program offered relief from criminal prosecution, all penalties, and partial interest relief for taxpayers with unintentional non-compliance. Interest relief was available for tax periods beyond the three most recent years required to be filed.
The Limited Program
The Limited Program applied to more serious cases. It offered relief from criminal prosecution and gross negligence penalties only. No interest relief and no other penalty relief were available. Taxpayers accepted into the Limited Program were required to waive their rights to object to reassessments related to the disclosed matters. Additionally, under IC00-1R6, any corporation with gross revenue exceeding $250 million was automatically assigned to the Limited Program regardless of the nature of its non-compliance.
The Narrower 2018 Voluntariness Test
Under IC00-1R6, the voluntariness test was considerably narrower than under the current IC00-1R7. A CRA Request to File missing returns, a general education letter, or even awareness of a pending enforcement action could disqualify a disclosure from being considered voluntary. This created a hard deadline that was easily missed and produced harsh results for taxpayers who had received general CRA outreach before they had the opportunity to file.
Impact of the 2018 Changes
The 2018 changes made the VDP a more daunting prospect. The requirement for upfront payment of estimated taxes effectively priced out less liquid taxpayers. The elimination of the no-name process removed the ability to assess eligibility without identifying the taxpayer. The uncertainty of the General/Limited track assignment introduced subjectivity that reduced incentives for participation. The firm’s experience was that overall participation in the program dropped precipitously following these changes.
The October 2025 Overhaul: How the Current Rules Differ from 2018
“The 2018 regime left taxpayers with a hard choice: file before any CRA contact, or lose the program entirely. The October 2025 overhaul changes that calculus in two important ways. The broadened voluntariness test means that many taxpayers who had received general CRA correspondence are no longer automatically disqualified. And the partial-relief tier means that even taxpayers who cannot qualify as unprompted now have a formal pathway. Whether either pathway is available, and which is better, depends on a careful legal analysis of the taxpayer’s specific facts under the protection of solicitor-client privilege.”
— David J. Rotfleisch, Certified Specialist in Taxation (Law Society of Ontario)
Effective October 1, 2025, the CRA replaced the 2018 structure with new rules governed by Information Circular IC00-1R7 and GST/HST Memorandum 16-5-1. The October 2025 VDP overhaul represents a partial reversal of the 2018 tightening. A comprehensive analysis of all aspects of the October 2025 overhaul is available in the firm’s dedicated article, CRA Overhauls the Voluntary Disclosures Program (VDP). The foundational principles of the VDP are covered in the firm’s tax evasion and voluntary disclosure primer.
General Relief — Unprompted Disclosures
The new general-relief tier provides 100% penalty relief and 75% interest relief for unprompted disclosures — applications submitted before the CRA has issued any compliance communication about the specific issue. This is more favourable than the former General Program, which offered only 50% interest relief.
Partial Relief — Prompted Disclosures
The October 2025 overhaul introduced the partial-relief tier for prompted disclosures — applications filed after the CRA has already communicated about the specific issue, or where third-party information has been received. This tier (up to 100% penalty relief, 25% interest relief) did not exist under the 2018 rules. Under the 2018 regime, a taxpayer who had received CRA contact about the specific issue was typically disqualified from the VDP entirely.
The Broadened Voluntariness Test
Under IC00-1R7, the CRA has significantly broadened the circumstances that qualify a disclosure as voluntary. Under IC00-1R6, a simple CRA Request to File missing returns, or even awareness of a pending enforcement action, could disqualify an application. Under IC00-1R7, an application will generally only be considered not voluntary if an audit or investigation has actually been initiated against the taxpayer or a related taxpayer in respect of the specific information being disclosed. Taxpayers who have received general CRA education letters, compliance nudges, or Requests to File on unrelated matters may still qualify for general relief on the disclosed issue.
Third-Party Data Sources as a Trigger for Prompted Status
IC00-1R7 provides that an application is prompted where the CRA has already received information from third-party sources regarding the potential involvement of a specific taxpayer in tax non-compliance. The CRA receives taxpayer-specific data under the Common Reporting Standard (offshore accounts), from FINTRAC (suspicious transactions), from the Canada Border Services Agency (importation data for luxury vehicle transactions), and from cryptocurrency exchange platforms. Taxpayers with offshore accounts, unreported cryptocurrency income, or luxury vehicle transactions should not assume the absence of a CRA letter means their non-compliance is unknown.
The Effective Date of Disclosure
The Effective Date of Disclosure (EDD) is the date the CRA receives the VDP application. From the EDD forward, any CRA compliance action initiated by another department on the disclosed non-compliance will not invalidate the application.
Critical Point: The EDD is only as protective as the disclosure is complete. A taxpayer who discloses five years of unreported income but omits a sixth year has not satisfied the completeness condition, which puts the entire application at risk of rejection. A knowledgeable Canadian tax lawyer ensures the completeness condition is fully satisfied before the EDD clock starts.
Expanded Scope: Additional Statutes
The October 2025 overhaul formally extended the VDP to cover non-compliance under the Select Luxury Items Tax Act, the Excise Tax Act, the Digital Services Tax Act, the Global Minimum Tax Act, the Air Travellers Security Charge Act, the Softwood Lumber Products Export Charge Act, and the Underused Housing Tax Act.
See the firm’s Canadian tax lawyer’s guide to the luxury tax for the underlying SLITA rules.
The Document Requirement: Six Years, Four Years, and Ten Years
Under IC00-1R7, taxpayers need only submit amended returns for the most recent six years for Canadian-sourced income (ten years for foreign income or assets; four years for GST/HST matters). Taxpayers must still disclose all known non-compliance across all years.
The $250 Million Corporate Threshold: Eliminated
IC00-1R7 eliminated the threshold that automatically assigned corporations with gross revenue above $250 million to the Limited Program. Large corporations are now assessed on the same prompted/unprompted basis as all other applicants.
Subsequent Applications: The Single-Condition Test
IC00-1R7 relaxed the second-application condition from requiring both — circumstances beyond the taxpayer’s control, and a different matter — to requiring only one of the two. Voluntariness is assessed on an issue-specific basis: a taxpayer under audit on one issue may still file a valid disclosure on a separate, unrelated matter.
Egregious Non-Compliance: The Hard Exclusion
The October 2025 overhaul preserved and formalized one hard exclusion: taxpayers whose non-compliance is found to be egregious or intentional will be denied VDP relief entirely. Under IC00-1R6, intentional non-compliance was addressed through the Limited Program. Under IC00-1R7, there is no longer a Limited Program safety valve. The categories most likely to attract the egregious characterization include deliberate suppression of income over multiple years, use of nominees or offshore structures to conceal assets, false statements made to the CRA in prior tax audits, and participation in abusive tax shelters.
Critical Warning: Filing a VDP application is an act of disclosure. If the CRA denies the application on the grounds of egregious or intentional non-compliance, the information provided remains with the CRA and can be used in any subsequent audit or prosecution. The decision to file must be made only after a thorough legal assessment under solicitor-client privilege.
Key Cases: Milgram Foundation and Gauthier
- In Milgram Foundation v. Canada (Attorney-General), 2024 FC 1405, the Federal Court quashed the CRA’s decision to re-open years predating an accepted VDP disclosure, finding the conduct an abuse of process. The CRA appealed to the Federal Court of Appeal (Court File No. A-323-24); the FCA heard the appeal December 1–2, 2025 and the decision was reserved as of the date of this article. The decision confirms that a complete disclosure forecloses the CRA’s ability to go further back on the same issues.
- In contrast, Gauthier v. Canada (National Revenue), 2017 FC 1173, illustrates the risk of incomplete disclosure: the CRA subsequently audited years predating a VDP application that covered only a portion of the taxpayer’s non-compliance.
- The judicial review standard for VDP decisions is reasonableness, established in Lanno v. Canada (Customs and Revenue Agency), 2005 FCA 153. Stemijon Investments Ltd. v. Canada (Attorney General), 2011 FCA 299, confirms that a mechanically applied VDP denial without genuine individualized consideration is per se unreasonable.
Relief Tier Comparison
| Relief Tier | Disclosure Type | Penalty Relief | Interest Relief | Criminal Protection |
|---|---|---|---|---|
| General Relief (post Oct 2025) | Unprompted | 100% | 75% | Yes |
| Partial Relief (post Oct 2025) | Prompted | Up to 100% | 25% | Yes |
| General Program (pre Oct 2025) | Voluntary, unintentional | 100% | 50% (nil if <3 yrs) | Yes |
| Limited Program (pre Oct 2025) | Serious / intentional | Gross neg. only | Nil | Yes |
| GST/HST Wash Transactions | Either | 100% | 100% | Yes |
“The elimination of the Limited Program removes the most punitive feature of the 2018 regime — but the October 2025 overhaul is not a restoration of the pre-2018 program either. The upfront tax payment requirement remains. The no-name process remains eliminated. The prompted/unprompted distinction creates new analytical complexity with real dollar consequences. And the egregious non-compliance exclusion is now a hard bar with no safety valve. Taxpayers and their advisors should not assume the new rules are simply more lenient — they are more nuanced, and the stakes of getting the analysis wrong are higher.”
— David J. Rotfleisch, Certified Specialist in Taxation (Law Society of Ontario)
Pro Tax Tips: Reassessing Your VDP Position Under the October 2025 Rules
Taxpayers who were deterred from applying under the 2018 rules — because of the upfront payment requirement, the uncertainty of the General/Limited track, or the disqualifying effect of prior CRA contact — should reassess their position. The partial-relief tier specifically addresses the prior-CRA-contact scenario.
The six-year return requirement addresses the administrative burden concern. And the expanded SLITA scope opens a new category of eligible applicants. Retaining an experienced Canadian tax litigation lawyer to conduct that reassessment under solicitor-client privilege remains the essential first step.
For taxpayers dealing with gross negligence penalties in the underlying non-compliance, the VDP analysis intersects with the penalty defence strategy and requires integrated legal advice.
- For cryptocurrency tax non-compliance, see the firm’s Canadian cryptocurrency tax practice.
- For the Ontario-specific VDP landscape, see the firm’s voluntary disclosure program Ontario guide.
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.
