You missed an HST filing two years ago. Or you forgot a T4 slip from a side gig. Or you found a bag of receipts in the basement and realised you under-claimed expenses on your last corporate return. Whatever it is, the question is the same: do you raise your hand, or do you wait and hope the CRA never figures it out?
There is a third option, and the CRA quietly made it a lot more attractive in October 2025. It is called the Voluntary Disclosures Program (VDP), and if you qualify, you can fix past mistakes and avoid most or all of the penalties.
Here is what changed, who qualifies, and what to do next.
Key takeaways
- The VDP lets you fix past CRA filing errors with up to 100% penalty relief, but only if you come forward before the CRA contacts you about the issue.
- On 1 October 2025 the program was restructured into two tracks: Unprompted (100% penalty relief, 75% interest relief) and Prompted (up to 100% penalty relief, 25% interest relief).
- Five conditions must be met. Miss any one and the application gets rejected.
- CRA data-matching (Etsy, Shopify, Airbnb, crypto exchanges) is faster and more aggressive every year. The window where you control the conversation is shrinking.
What the Voluntary Disclosures Program does.
The VDP is the CRA’s official second-chance program. If you come forward before the CRA contacts you about a problem, the CRA will let you fix the return, pay the tax owing, and skip the penalties (and a chunk of the interest).
The program has been around for years. What changed on 1 October 2025 is the structure and the relief percentages. The old “General” and “Limited” categories are gone. Two new tracks took their place: Unprompted and Prompted.
The two tracks (and what each one gets you).
The track you qualify for depends on whether the CRA has already contacted you about the issue.
| Track | When it applies | Penalty relief | Interest relief |
|---|---|---|---|
| Unprompted | You come forward before any CRA contact about the issue | 100% | 75% |
| Prompted | The CRA has contacted you, but no audit has started | up to 100% | 25% |
A few things to note. “Contact” does not mean every letter. General education letters, sector-wide outreach, and reminders do not knock you out of the unprompted track. You only drop to the prompted track if the CRA has flagged a specific error on your account or set a deadline for you to respond.
The five things you need to qualify.
The CRA still requires every VDP application to meet five conditions. Miss any one of them and your application gets rejected.
- The issue involves a penalty or interest. If you owe tax but no penalty applies, you do not need the VDP. You can just file an amended return.
- The disclosure is voluntary. You came forward on your own, not because you were caught.
- The disclosure is complete. You include every relevant year, every fact, and every dollar. Half a confession does not count.
- The issue is at least one year overdue. A return that was due last week does not qualify. A return that was due 14 months ago does.
- You pay (or arrange to pay) the tax owing. The CRA wants the principal. They are flexible on penalties and interest if you qualify, but the underlying tax debt has to be paid or scheduled through an approved payment plan.
If all five boxes get ticked, you have a real shot at major relief.
What can you fix through the VDP?
The most common situations we see in Oshawa, Whitby, Ajax and Pickering:
- HST filings that were missed or under-reported
- T4 or T4A slips that were never issued for contractors or part-time staff
- Foreign income that was not reported (rental property in Florida, dividends from a US brokerage, crypto sold on an offshore exchange)
- Personal returns where business income was missed entirely
- Corporate returns where shareholder loans, capital cost allowance, or eligible deductions were misreported
Documentation expectations are six years for domestic issues, ten years for foreign-sourced income, and four years for HST.
What the VDP does not cover.
The VDP is not a magic eraser. It does not cover:
- Tax fraud or aggressive tax avoidance schemes that the CRA has already named
- Issues where the CRA has already started an audit on you for that specific year and topic
- Returns less than one year overdue (for those, just file the amendment)
- Cases where you cannot pay the tax owing and have no realistic plan to do so
If you are unsure whether you qualify, the CRA accepts informal pre-disclosure discussions. You can make an anonymous inquiry through your CPA before committing your name to an application.
The cost of waiting.
Here is what it looks like if you do nothing and the CRA finds the issue first.
Worked example: $40,000 of under-reported business income
Say you under-reported $40,000 of business income three years ago.
If the CRA finds it first:
- Tax bill: roughly $10,000 to $14,000 depending on bracket
- Gross negligence penalty of 50% of tax owing: $5,000 to $7,000
- Arrears interest at the prescribed rate, compounded daily
- Possible repeat-failure penalties on top
The total can easily double the original tax debt.
Through the VDP unprompted track:
- Tax owing: same
- Interest: 25% of what you would otherwise owe
- Penalties: eliminated
The numbers usually work out to roughly half of what you would pay if the CRA caught you first.
Why doing this with a CPA matters.
The VDP application form (RC199) was simplified in October 2025, but the substance of the application has not. You still need to present every relevant year, every adjusted amount, and every supporting document in a format the CRA officer can review without ambiguity.
Amateur applications get rejected for two main reasons.
- Incompleteness. A taxpayer remembers one missed slip but forgets to mention three others, and the application loses its “complete” status when the CRA finds the rest.
- Voluntariness disputes. The CRA digs into whether you came forward genuinely on your own or only after a sector-specific letter that you read as general but the CRA reads as specific.
A CPA who handles VDP applications knows what triggers a voluntariness dispute, what counts as “complete” disclosure, and how to package the file so the CRA officer can approve it on the first review. We also handle the conversations with the CRA so you do not have to. Our team helps Durham Region clients with corporate and personal tax cleanup and full tax planning around past disclosures.
Where to start.
If you are sitting on a filing problem you have been avoiding, the worst thing you can do is keep avoiding it. CRA data-matching is faster and more aggressive every year. Slips from Etsy, Shopify, Airbnb and gig platforms now flow to the CRA automatically. Crypto exchanges are reporting Canadian users to the CRA under new international agreements.
The window where you control the conversation is the window before the CRA opens a file on you. After that, the relief shrinks fast.
Fixing it in Durham Region.
If you have been losing sleep over a missed filing, an under-reported figure, or a return that was never quite right, let’s talk. We handle voluntary disclosures discreetly and professionally for business owners across Oshawa, Whitby, Ajax, Pickering, Clarington, Bowmanville and the rest of Durham Region.
Book a free 15-minute call and we’ll tell you in plain language whether the VDP is the right move for your situation, what you can expect to save, and what the next steps look like.
This article is for general information only and doesn’t replace professional tax advice. Tax rules change, and your specific situation matters. Always confirm with a qualified CPA before making tax decisions.
