The short version
- The Voluntary Disclosures Program (VDP) lets you correct unreported income, unfiled returns or wrong claims before CRA comes looking, in exchange for relief from penalties and part of the interest. You still pay the tax.
- Since October 1, 2025: unprompted disclosures get 100% penalty relief and 75% interest relief. Prompted ones (for example after a CRA letter about unreported income) get up to 100% penalty relief and 25% interest relief.
- Both protect you from criminal prosecution for what you disclosed.
- A disclosure must be voluntary, complete, involve a penalty or interest, include something at least one year overdue, and come with payment of the estimated tax or a request to arrange payment.
- You can't use it once you're under audit or investigation for the issue, and CRA can refuse egregious cases. Apply on form RC199 or online.
CRA Voluntary Disclosures Program
Most people who need the VDP know exactly why. The cash jobs nobody invoiced. The Airbnb income that "didn't really count." The returns that stopped getting filed in 2019 and became harder to start every year. The program is CRA saying: tell us first, pay the tax, and we'll go easy on the rest. Tell them second, after they've found it, and the rest gets expensive. Here's how it works and when to get help before you apply.
Relief, Before and After CRA Finds It
| Unprompted VDP | Prompted VDP | CRA finds it in an audit | |
|---|---|---|---|
| Tax owing | Pay in full | Pay in full | Pay in full |
| Penalties | 100% relieved | Up to 100% relieved | Charged: repeated failure to report (up to 10% of the income), gross negligence (50% of the tax) |
| Interest | 75% relieved | 25% relieved | All of it, compounded daily |
| Prosecution | Protected | Protected | Possible in serious cases |
"Prompted" means CRA has already reached out in a general way, such as an education letter about unreported income or ineligible expenses, but hasn't started an audit or investigation of you on that issue. That door used to be closed; since October 2025 it isn't.
The Five Conditions
- Voluntary: made before CRA starts enforcement action, an audit or an investigation on the issue.
- Complete: every year and every issue you know about. A disclosure that leaves something out can be cancelled, and then everything is back on the table.
- Involves a penalty or interest: if nothing would be charged, just file or change the return.
- At least one year overdue: an unfiled return or unreported amount at least a year past its due date. Newer mistakes are fixed by filing or adjusting normally.
- Payment: pay the estimated tax with the application, or ask about a payment arrangement as part of it.
What It Covers
- Unreported income: cash jobs, side businesses, online selling, short-term rentals, tips.
- Unfiled returns with tax owing.
- Foreign income and unreported foreign property (form T1135).
- GST/HST you should have collected and remitted; see do I need a GST/HST number.
- Payroll deductions not remitted, and expenses claimed that you weren't entitled to.
Relief can generally reach back up to 10 years. CRA usually wants returns for at least the last six years, and longer for foreign income and assets.
How to Apply
- Get advice first if the amounts are large, foreign assets are involved, or there's any chance of a criminal angle. A lawyer's advice is privileged; an accountant's generally isn't.
- Optional pre-disclosure discussion: a free, no-obligation conversation with CRA about how the program would treat your situation.
- Prepare the returns and figures for every year involved, with supporting documents.
- Submit form RC199 with the returns and payment (or a payment proposal), online or by mail.
- Wait for the decision. CRA reviews completeness, may ask for more, and then reassesses with the relief applied.
Not sure if the VDP is right for you?
Describe what wasn't reported, which years and whether CRA has contacted you. The assistant tells you whether it's a VDP case, a simple adjustment, or a job for a professional, and what each route costs.
When Not to Use It
- Recent, small mistakes: just change the return; see changing your return.
- Returns that are late but owe nothing (or produce refunds): just file them.
- You're already under audit for that issue: the VDP is closed; cooperate with the audit and get advice.
- You only want interest or penalties cancelled for hardship or illness: that's taxpayer relief.
After the Disclosure
CRA says coming forward isn't a trigger for extra scrutiny of your future returns. It is, however, the end of the line for that issue: a second disclosure on the same thing generally won't be accepted. Report everything going forward, keep records, and if paying the bill is the problem, see payment arrangements. More on CRA is on the CRA guide.
Voluntary Disclosure Questions
What is the CRA Voluntary Disclosures Program?
A program that lets taxpayers correct unreported income, unfiled returns or other errors before CRA finds them, in exchange for relief from penalties and part of the interest, and protection from prosecution. The tax itself must still be paid.
How much relief does the VDP give?
Since October 1, 2025, unprompted disclosures get 100% penalty relief and 75% interest relief. Prompted disclosures get up to 100% penalty relief and 25% interest relief.
Can I apply if CRA sent me a letter?
Possibly. A general letter about a potential issue makes the disclosure prompted, which still qualifies for reduced relief. Once CRA has started an audit or investigation on the issue, the program is no longer available for it.
Do I have to pay the tax when I apply?
You are expected to pay the estimated tax owing with the application or arrange to pay it. Relief applies to penalties and interest, not to the tax.
Will a voluntary disclosure lead to an audit?
CRA says a disclosure is not a trigger for increased scrutiny of future returns. It will review the disclosure itself for completeness.
Sources: CRA, Changes to the Voluntary Disclosures Program; The Voluntary Disclosures Program: your second chance (2026); MNP, CRA updates Voluntary Disclosures Program. Checked October 2026. Sources differ slightly on whether payment must accompany the application or can be arranged; confirm with CRA before applying. The six- and ten-year documentation periods are CRA's usual expectations as reported by practitioners, not fixed rules. Penalty descriptions are summarized from section 163 of the Income Tax Act.
Last reviewed October 5, 2026 against CRA and Government of Canada sources. How we check our facts.