CRA Voluntary Disclosure and Tax Corrections

Discovering that a past return was wrong, or that returns were never filed, is more common than most people assume, and it can be fixed. The right fix depends on what went wrong, how much tax is involved, whether the CRA has already been in touch, and whether there is any risk that the conduct could be viewed as more than a mistake.

This guide sets out the three main routes, explains the Voluntary Disclosures Program (VDP) as it has applied since October 1, 2025, and describes what you will need in order to decide between them. It covers income tax and GST/HST.

Common problems that need correcting

Unreported income, such as cash or side-business income, rental income, foreign investment income, or gains from cryptocurrency.
Unfiled returns, whether personal, corporate, GST/HST or payroll.
Deductions or credits claimed without entitlement or adequate support.
GST/HST that was not charged, collected or remitted correctly, or input tax credits that should not have been claimed.
Payroll source deductions that were not withheld or remitted.
Missed information returns, such as foreign property reporting (Form T1135).

Three ways to correct the record

	Ask the CRA to change a filed return	File overdue returns	Apply to the VDP
What it is	A request to adjust a return the CRA has already assessed	Filing returns that should have been filed	A formal application (Form RC199) disclosing errors or omissions, with the documents needed to correct them
Penalty relief	Not part of the process; normal penalties can apply	Not part of the process; late-filing penalties can apply	100% (unprompted) or up to 100% (prompted) of applicable penalties, if relief is granted
Interest relief	Not part of the process	Not part of the process	75% (unprompted) or 25% (prompted) of applicable interest, if relief is granted
Criminal prosecution	No protection	No protection	No referral for prosecution on the issues disclosed, if relief is granted
Key conditions	Return must already be assessed; individuals can generally request changes for the previous ten calendar years	None beyond filing correctly	Must be voluntary, include all required documents, relate to a year at least one year past its filing due date, involve penalties or interest, and include payment or a payment-arrangement request

Sources: CRA, Change your return; CRA, IC00-1R7.

Outside the VDP, the CRA can also cancel or waive penalties and interest under the taxpayer relief provisions in some circumstances, such as events beyond your control (CRA, IC07-1R1). That is a separate request, judged on different criteria.

A VDP application is not simply a better-protected amended return. It requires you to disclose all known errors and omissions, and the CRA can audit what you disclose (CRA, IC00-1R7). The choice between routes should be made with the whole picture in view.

The Voluntary Disclosures Program

The VDP gives taxpayers an opportunity to tell the CRA about errors or omissions in their tax obligations and correct them. If the CRA grants relief, the taxpayer may receive some penalty and interest relief and will not be referred for criminal prosecution. Any tax owing must still be paid in full (CRA, IC00-1R7).

The CRA states that the program is meant to be fair rather than to reward non-compliance: a taxpayer who followed the rules should not be worse off economically than one who uses the VDP. Relief is discretionary. The CRA is not required to grant it, and each application is decided on its own merits (CRA, IC00-1R7).

The program covers income tax, GST/HST, withholding taxes and a range of other taxes administered by the CRA. GST/HST and several other taxes are dealt with in a separate memorandum (CRA, GST/HST Memorandum 16-5-1).

What changed on October 1, 2025

The current rules are in Information Circular IC00-1R7 and GST/HST Memorandum 16-5-1. They apply to applications received on or after October 1, 2025; applications received earlier are considered under the previous versions (CRA, Changes to the VDP). The main changes:

Broader eligibility. Taxpayers who are prompted by CRA communications identifying a specific compliance issue can now apply. Applications made after only an education letter or general notice are treated as unprompted (CRA, IC00-1R7). The CRA continues to restrict eligibility for those under audit or investigation and those who were egregiously non-compliant (CRA, Changes to the VDP).
Two levels of relief. General relief for unprompted applications and partial relief for prompted ones (see below).
A simplified Form RC199, which must be used for applications.
Defined documentation periods for how many years an application must cover (see below).

If you read about the VDP elsewhere, check the date. Material written before October 2025 describes "general" and "limited" program streams that no longer apply to new applications.

Eligibility

To qualify for relief, all of the following must be met (CRA, IC00-1R7):

The application is voluntary (see the next section).
It includes information about a tax year that is at least one year past its filing due date.
It involves an error or omission with applicable penalties, interest or both.
All supporting documents are included, and you respond fully and promptly to the CRA's requests for information.
You make payment, or request a payment arrangement, for the estimated tax owing, where applicable.

The CRA lists situations that are not eligible, including applications that relate only to refunds or returns with no tax or penalties owing, requests to cancel penalties or interest that have already been assessed, applications that seek to make or change an election, years involving an insolvency event, and matters covered by an advance pricing arrangement (CRA, IC00-1R7). Taxpayers must stay compliant after relief is granted; the CRA may consider a later application if the circumstances were beyond the taxpayer's control or relate to a different matter.

Prompted, unprompted, or not voluntary at all

Whether, and how much, relief is available depends heavily on what contact the CRA has had with you, or with a related taxpayer, about the issue (CRA, IC00-1R7).

Your situation	How the CRA generally treats it	Relief normally available
No communication from the CRA about the issue, or only an education letter or notice giving general guidance	Unprompted	100% of applicable penalties; 75% of applicable interest
A letter or call identifying a specific error or omission on your account, or setting a deadline to correct or file; or the CRA already has third-party information about your (or a related taxpayer's) possible non-compliance	Prompted	Up to 100% of applicable penalties; 25% of applicable interest
An audit or investigation has already started against you or a related taxpayer concerning the information you want to disclose, including one by a law enforcement agency, securities commission or other regulator	Not voluntary	No VDP relief

Two practical points follow. First, whether a particular letter was an education letter or identified a specific issue can decide the level of relief, so keep every piece of CRA correspondence and have it reviewed before you apply. Second, because the CRA's information about you can change at any time, waiting can turn an unprompted application into a prompted one, or make it ineligible.

Relief available

If an application qualifies (CRA, IC00-1R7; GST/HST Memorandum 16-5-1):

Unprompted applications normally receive 100% relief of applicable penalties and 75% relief of applicable interest.
Prompted applications normally receive up to 100% relief of applicable penalties and 25% relief of applicable interest.
GST/HST wash transactions that qualify under the CRA's wash-transaction policy normally receive full relief of the applicable penalties and interest.
In every case where relief is granted, the CRA will not refer the disclosed matters for criminal prosecution, and gross negligence penalties will not apply to the information disclosed.

Relief is also limited by the ten-year limitation period that applies to penalty and interest relief, so amounts relating to older years may fall outside it (CRA, Limitation period on exercising discretion).

What the application must include

Form RC199, the VDP application form (CRA, IC00-1R7).
All known errors and omissions, including related arm's-length and non-arm's-length transactions. An application can be denied if the CRA learns of other non-compliance that was not disclosed.
Supporting documents for the required period: the most recent six years for income tax; the most recent ten years where the errors relate to income or assets outside Canada (CRA, IC00-1R7); and the most recent four years for GST/HST (GST/HST Memorandum 16-5-1). Years with no errors need not be included, but the CRA can ask for documents for earlier years.
Reasonable estimates where books and records do not exist.
The name of anyone who advised or assisted you on the subject of the disclosure, including a tax professional or promoter.
Payment, or a request for a payment arrangement, for the estimated tax owing. Approval of a payment arrangement is not guaranteed.

You can use an authorized representative to submit the application. If you are unsure whether to apply, the CRA offers informal, non-binding preliminary discussions on an anonymous basis (CRA, IC00-1R7).

After you apply

Once the CRA acknowledges the application, it assigns an effective date of disclosure; if relief is granted, it applies up to that date. The CRA reviews eligibility and notifies you of its decision in writing (CRA, IC00-1R7).

The VDP's own review is limited in scope. The CRA reserves the right to audit or verify anything in an application, whether or not relief is granted, and other areas of the CRA can reassess within the normal limitation rules. Where the CRA finds fraud or a misrepresentation due to neglect, carelessness or wilful default, it can assess at any time for any year to which that relates, not only the years in the application.

If relief is denied or is less than you expected:

You can ask for a second administrative review in writing.
You can apply to the Federal Court for judicial review within 30 days of the decision being sent; the CRA asks that a second review be requested first.
There is no right of objection to a VDP decision, although you may be able to request relief under the separate taxpayer relief provisions.

Records you will need to assess your options

Before deciding which route fits, gather:

every letter, notice and record of calls from the CRA, with dates
the returns filed, and notices of assessment, for the years affected
bank, investment and brokerage statements for those years, including foreign accounts
records of the income, transactions or claims at issue
the name of anyone who prepared the returns or advised on the matter
whether any related person or corporation is currently being audited or investigated

The roles of lawyers and accountants

An accountant is usually essential: reconstructing figures, quantifying what was missed and preparing the corrected or overdue returns that go with an application.

A lawyer's role is different. Before anything is filed, a lawyer can assess whether the facts raise a risk of gross negligence penalties or prosecution, whether the application is likely to be treated as voluntary and as prompted or unprompted, what has to be disclosed, and how to handle a preliminary discussion with the CRA. Communications with a lawyer for the purpose of legal advice can be protected by solicitor-client privilege. Communications with an accountant generally are not; Canadian courts have declined to recognize an accountant-client privilege for tax advice (Tower v. M.N.R., 2003 FCA 307). Privilege has limits, which are explained in the disputes guide.

Neither profession can promise that an application will be accepted or that a particular level of relief will be granted. That decision belongs to the CRA.

Return to the Taxpayer Resource Centre, or read about CRA audits and disputing a CRA decision.

Thinking about a voluntary disclosure?

We advise individuals and owner-managed businesses in Ontario on whether a voluntary disclosure, an adjustment request or overdue filings is the better route, and prepare VDP applications with your accountant. See our Tax Defence services or request a confidential consultation.