Not everyone who files late or misses income does so intentionally. Careers change, foreign accounts get opened and forgotten, and some people simply fall behind on multiple years of returns. For tax issues not yet disclosed to the CRA, the Voluntary Disclosures Program (VDP) exists for exactly this situation. This page explains how it works; it is part of the Dealing with the CRA directory.
Note: CRA overhauled the VDP effective October 1, 2025 (under Information Circular IC00-1R7), replacing the old “General Program” / “Limited Program” structure with a new “unprompted” / “prompted” framework described below.
What the VDP is (and is not)
The VDP is part of CRA’s Taxpayer Relief framework. It is designed to encourage compliance by offering a deal: come forward before we flag it, and we will reduce the consequences.
What the VDP does:
- Cancels or reduces civil penalties on qualifying disclosures
- Reduces accrued interest; the amount depends on whether your application is unprompted or prompted
- Reduces the risk of criminal prosecution for tax evasion when you come forward before an audit or investigation starts
What the VDP does not do:
- Forgive the underlying tax you actually owe
- Eliminate all interest on unpaid tax
- Apply once CRA has already initiated an audit or investigation into the specific issue
- Apply to nil or refund-only returns, or to penalties/interest already assessed (Taxpayer Relief, Form RC4288, covers those instead; see CRA payment arrangements and taxpayer relief)
The two application types: unprompted vs. prompted
Effective October 1, 2025, CRA sorts every VDP application into one of two categories based on whether, and how, CRA had already been in contact about the specific issue. This replaced the old General Program / Limited Program distinction, which was based on the size and severity of the non-compliance.
Unprompted applications
You come forward with no prior CRA compliance contact on the issue, or the only prior contact was a general educational letter or notice (these do not disqualify you or downgrade your application).
Relief available:
- Civil penalties: 100% relief
- Interest: 75% relief
Prompted applications
CRA has already contacted you specifically about the issue (for example, a letter flagging a compliance deadline or a specific discrepancy, or CRA has third-party information pointing to the non-compliance), but no formal audit or investigation has been opened on it yet.
Relief available:
- Civil penalties: up to 100% relief
- Interest: 25% relief
Once a formal audit or investigation has been initiated into the specific issue, the disclosure is no longer voluntary and the VDP is not available for that issue at all; see “What happens if CRA contacts you first” below.
The four eligibility conditions
Your VDP application must meet all four conditions under IC00-1R7:
1. Voluntary
No audit or investigation has already been initiated by CRA (or another authority, such as a provincial tax agency) into the specific issue you’re disclosing. Receiving an educational letter does not make a disclosure non-voluntary; it keeps you in the unprompted category.
2. At least one year past due
The information you are disclosing must relate to a tax year or reporting period that is at least one year past its filing due date. You cannot use the VDP for a same-year correction; that is done with an amended return (T1-ADJ) or ReFILE, covered in what to do if you made a mistake on your tax return.
3. Involves an actual error or omission with money at stake
The disclosure must involve interest charges, penalties, or both that would otherwise apply.
4. Complete and cooperative
You must disclose everything related to the issue, not just part of it, and respond fully and promptly to any CRA follow-up requests. Partial disclosure disqualifies the application.
Common VDP scenarios
| Situation | VDP route |
|---|---|
| 3 years of unfiled personal tax returns | Yes: unprompted if CRA hasn’t contacted you |
| Unreported tips/cash income over several years | Yes: unprompted if CRA hasn’t contacted you |
| Foreign bank account never reported (T1135) | Yes: unprompted or prompted depending on prior CRA contact |
| Cryptocurrency gains never declared | Yes: unprompted or prompted depending on prior CRA contact |
| Unreported rental income | Yes: unprompted if CRA hasn’t contacted you |
| GST/HST not collected on self-employment | Yes: unprompted if CRA hasn’t contacted you |
| Received a general CRA “educational letter” | Yes: still counts as unprompted |
| CRA has already opened a formal audit on the issue | No: not voluntary; see alternatives below |
How to apply (step by step)
Step 1: Consider an anonymous pre-disclosure consultation
You (or your accountant or tax lawyer) can call CRA’s VDP line at 1-866-837-7888 (the CRA’s other numbers are on the CRA contact information page) and describe the situation without giving your name or SIN. CRA will advise whether the situation appears to qualify, whether it would likely be treated as unprompted or prompted, and what relief might be available.
This call has no legal consequences; it is exploratory only.
Step 2: Prepare the full disclosure package
You will need:
- Completed Form RC199 (Voluntary Disclosures Program Application), available on canada.ca
- Completed tax returns for all unfiled years (T1 Returns, prepared correctly)
- Supporting documentation: 6 years for standard (Canadian-sourced) issues, or 10 years if the error or omission relates to income or assets located outside Canada
- A written explanation of why the returns were not filed or income not reported
Step 3: Submit to the VDP
Submit your application one of three ways:
- Online through CRA My Account, My Business Account, or Represent a Client
- Fax: 1-888-452-8994
- Mail: Voluntary Disclosures Program, 4695 Shawinigan-Sud Boulevard, Shawinigan, QC G9P 5H9
Step 4: Await acceptance and pay
CRA will review the application, confirm the effective date of disclosure, and notify you which category (unprompted or prompted) it was assessed under and what relief applies. You are then expected to pay the remaining taxes and interest by the date specified. The arrangement is not final until you pay.
What happens if CRA contacts you first
If CRA opens a formal audit or investigation into the specific issue before you submit a VDP application, the VDP is no longer available for that issue. However:
- If CRA has only sent a general compliance letter (not a formal audit), you may still qualify as a prompted application, with reduced (25%) interest relief
- You may still negotiate a payment arrangement with Collections (see CRA payment arrangements)
- You may still apply for Taxpayer Relief for penalties and interest using Form RC4288 if you have legitimate hardship grounds
- If you have other unreported issues beyond what CRA found, you can still file a VDP (as an unprompted application) for those separate issues
Working with a tax professional
For complex situations (multiple unfiled years, significant foreign assets, or large dollar amounts), many people work with a tax lawyer rather than only an accountant. Lawyers have solicitor-client privilege, meaning communications about your situation cannot be compelled by CRA. An accountant does not have the same protection.
For simpler cases (a few missed years of T4 income, straightforward unreported freelance income), a CPA can typically handle the VDP application.
Pre-Disclosure Discussion: Testing the Waters
The VDP allows a “no-name” inquiry before you formally commit:
| Feature | Details |
|---|---|
| Anonymous inquiry | Discuss your situation without identifying yourself |
| No commitment | You can decide not to proceed |
| CRA opinion | Preliminary view on eligibility and likely category (unprompted/prompted) |
How to request: Call the VDP line at 1-866-837-7888, or submit a written request through your tax advisor. Provide general (anonymous) details of the situation; CRA gives a preliminary view; you then decide whether to proceed.
When NOT to Use the VDP
May Not Be Worth It
| Situation | Consideration |
|---|---|
| Very small amounts | Penalties may be minimal; VDP professional fees could exceed the savings |
| Nil or refund-only returns | Not eligible under the VDP at all |
| Error is less than one year old | Amend the return normally; VDP requires the issue to be at least one year old |
VDP Not Available: Alternatives
| Situation | Alternative |
|---|---|
| CRA audit or investigation already opened on the issue | The audit continues (see responding to a CRA audit letter); Taxpayer Relief (RC4288) is a separate request |
| Criminal investigation underway | A criminal tax lawyer |
| Issue is less than 1 year old | An amended T1 (T1-ADJ) or ReFILE, including through CRA My Account |
| Penalties/interest already assessed | Taxpayer Relief (Form RC4288), not the VDP |
| Bankruptcy or insolvency during the relevant years | Excluded from the VDP; a matter for your trustee |
T1135 (Foreign Property) and the VDP
Unfiled T1135 forms are one of the most common VDP applications. Who has to file the form is covered in the T1135 guide. The standard late-filing penalty for T1135 is:
| Factor | Details |
|---|---|
| Standard late-filing penalty | $25 per day the return is late, minimum $100, maximum $2,500 per year |
| Enhanced penalty (knowing failure or gross negligence) | $500 per month, up to 24 months (maximum $12,000); after 24 months, 5% of the cost of the foreign property, or of the relevant amount that triggered the filing requirement |
| Common VDP use | Unfiled T1135 forms for multiple years |
| VDP benefit | T1135 penalties relieved per the unprompted/prompted rules above |
| Requirement | Must still file T1135 for all missed years |
Example: If you failed to file T1135 under the standard penalty for 5 years , potential penalties total up to $12,500 (5 × $2,500 maximum). Through the VDP, those penalties can be substantially or fully relieved. You still owe any tax on unreported foreign income plus whatever interest isn’t relieved, but the penalty savings alone can be significant.
Related resources
- What happens if you don’t file your taxes: late-filing penalties and catching up on returns outside the VDP
- CRA audit triggers: what makes the CRA look at a return
- Disputing a CRA assessment: if you disagree with an assessment issued after a disclosure
- Can you deduct investment fees?: getting future returns right