CRA Revamps Voluntary Disclosures Program: What Taxpayers Need to Know?

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September 11, 2025
M. Hanif Shaikh

The Canada Revenue Agency (CRA) has announced significant changes to its Voluntary Disclosures Program (VDP), effective October 1, 2025. The revisions are designed to encourage more taxpayers to come forward, simplify the application process, and strike a balance between fairness and compliance.

For taxpayers with past filing mistakes or unreported income, these changes may open new opportunities for relief. Here’s what you need to know.

Key Changes to the VDP

1. Broader Eligibility

Previously, taxpayers who had received a compliance “nudge” letter from the CRA were generally excluded from applying. Under the new rules, many of these taxpayers can still qualify for the VDP—unless they are already under audit or engaged in serious, intentional non-compliance.

2. Simplified Applications

The CRA is introducing a streamlined Form RC199 with clearer instructions. The policy language has also been revised to reduce confusion and make it easier for individuals and businesses to apply without technical missteps.

3. Tiered Relief Framework

Relief will now be categorized based on whether a disclosure is “prompted” or “unprompted”:

• Unprompted disclosures (general relief):
  • 100% penalty relief
  • 75% interest relief
• Prompted disclosures (partial relief, e.g., after receiving a CRA notice):
  • Up to 100% penalty relief
  • 25% interest relief

This change recognizes that taxpayers may come forward even after receiving CRA communications, while still rewarding those who act voluntarily.

4. Standardized Documentation Requirements

The CRA has clarified how many years of records must be provided:

• Foreign income or assets: last 10 years
• Canadian income or assets: last 6 years
• GST/HST issues: last 4 years

This ensures consistency across different types of disclosures.

Why the CRA Made These Changes

The CRA’s goal is twofold:

1. Encourage compliance by making the program more accessible to honest taxpayers who want to correct mistakes.
2. Preserve fairness by limiting relief for those who acted deliberately or are already under investigation.

By offering clear guidance and tiered relief, the CRA hopes to remove barriers that may have discouraged people from coming forward in the past.

What This Means for You

• If you have unreported income, offshore assets, or past filing errors, now may be the best time to consider a disclosure.
• If you’ve recently received a CRA letter about potential non-compliance, you may still qualify under the new prompted disclosure rules.
• Timing matters: disclosures made before October 1, 2025 will be reviewed under the old rules, while those filed after that date will follow the new framework.

Final Thoughts

The revamped VDP represents a major shift in how the CRA approaches voluntary compliance. For many taxpayers, it opens the door to correcting past mistakes with reduced financial and legal consequences.

If you believe you may benefit from the program, professional advice is strongly recommended. A tax lawyer can assess your eligibility, help structure your disclosure, and ensure you maximize available relief.