What is the CRA Voluntary Disclosure Program?

The VDP allows taxpayers to voluntarily correct tax mistakes or omissions before CRA discovers them. In exchange for coming forward, you may receive relief from penalties and potentially reduced interest. You must still pay the taxes owed.

Can I use VDP if CRA is already auditing me?

No. A key VDP requirement is that you must come forward before CRA takes any enforcement action. If CRA has contacted you about an audit or assessment related to the issue, VDP is not available for that matter.

Should I use a tax professional for VDP?

Generally yes. VDP applications require careful preparation, accurate calculations, and complete disclosure. Mistakes can result in rejection. A tax lawyer or accountant experienced with VDP can help ensure your application meets all requirements.

CRA Voluntary Disclosure Program: How to Fix Tax Mistakes (2026)

What Is the Voluntary Disclosure Program?

Feature	Details
Purpose	Correct tax errors before CRA finds them
Benefit	Reduced or eliminated penalties
Coverage	Income tax, GST/HST, payroll, other taxes
Requirement	Must be voluntary (before CRA action)
Taxes owed	Must still be paid
Interest	Usually still owed (partial relief possible)

Two VDP Tracks

Limited Program (Income Tax)

Feature	Details
For	Non-compliance without intent to evade
Penalty relief	Gross negligence penalties waived
Interest relief	50% of interest may be waived
Prosecution	Protection from criminal prosecution
Examples	Forgot to report income, honest mistakes

General Program (GST/HST, Other)

Feature	Details
For	GST/HST, excise, payroll corrections
Penalty relief	Generally available
Interest relief	Case-by-case basis
Requirements	Same as limited program

Eligibility Requirements

All Requirements Must Be Met

Requirement	Explanation
Voluntary	Before CRA enforcement action
Complete	All relevant information disclosed
Involves penalty	Tax owed must attract a penalty
One year old	Information at least one year old
Payment included	Full payment or arrangement

What Disqualifies You

Situation	VDP Available?
CRA already auditing you	No
CRA sent information request	No
Media exposure of issue	Possibly no
Active investigation	No
Bankrupt/in insolvency	May have restrictions

When to Use VDP

Common Situations

Situation	VDP Appropriate
Unreported foreign income	Yes
Unreported investment income	Yes
Missed T-slips	Yes
Undeclared self-employment income	Yes
Foreign property not reported (T1135)	Yes
Claiming ineligible expenses	Yes
Unreported cryptocurrency gains	Yes

Examples

Scenario	Potential Issue	VDP Benefit
T3/T5 slip missed for 3 years	Back taxes + penalties	Penalties waived
Foreign rental income unreported	Significant taxes + penalties	Penalty relief, interest reduction
Cash business underreported	Gross negligence penalties	Prosecution protection
T1135 never filed	$2,500+/year penalties	Penalties waived

How to Apply

Application Process

Step	Action
1	Determine eligibility
2	Gather all relevant documents
3	Calculate taxes and interest owed
4	Complete Form RC199
5	Submit application and payment
6	Wait for CRA decision

What to Include

Document	Purpose
Form RC199	Official VDP application
Detailed explanation	What happened, why
Amended returns	For all affected years
Supporting documents	T-slips, statements, etc.
Payment or arrangement	Full taxes + interest

Pre-Disclosure Discussion

What It Is

Feature	Details
Anonymous inquiry	Discuss before formal application
No commitment	Can decide not to proceed
Get opinion	CRA’s view on eligibility
Time-limited	90 days to submit formal application

How to Request

Step	Action
1	Call VDP line or submit written request
2	Provide general (anonymous) details
3	CRA gives preliminary view
4	Decide whether to proceed

What Happens After Applying

CRA Review Process

Stage	Timeline
Initial review	2-4 weeks
Detailed review	6-12 months (can be longer)
Additional questions	CRA may request more info
Decision	Accept, partial accept, or reject

Possible Outcomes

Outcome	What It Means
Full acceptance	Penalties waived, interest relief
Partial acceptance	Some relief granted
Rejection	Normal penalties and interest apply

Costs and Considerations

What You Still Pay

Item	Required?
Tax owed	Yes, always
Interest (arrears)	Usually yes (partial relief possible)
Professional fees	Your cost

Professional Fees

Service	Typical Range
Tax lawyer consultation	$300-500/hour
Full VDP application (simple)	$2,000-5,000
Complex international matters	$5,000-20,000+

When NOT to Use VDP

May Not Be Worth It

Situation	Consideration
Very small amounts	Penalties may be small anyway
Already compliant	May not qualify
CRA unlikely to find out	Ethical/risk question

VDP Not Available

Situation	Alternative
CRA audit in progress	Cooperate with audit
Criminal investigation	Get legal counsel immediately
Less than 1 year old	Amend return normally

T1135 (Foreign Property)

Special Considerations

Issue	Details
Common VDP use	Unfiled T1135 forms
Penalties	$2,500/year (can be $25/day for knowing)
VDP benefit	Penalties waived
Requirement	Still must file for all years

T1135 VDP Example

Factor	Amount
Years unfiled	5
Potential penalties	$12,500+
With VDP	$0 penalties
Taxes owed	Depends on undisclosed income