CRA Revises the Voluntary Disclosures Program for 2025: Key Changes You Should Know
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Summary:
The CRA is implementing major updates to its Voluntary Disclosures Program (VDP), effective October 1, 2025, making it easier for taxpayers to correct past errors while receiving interest and penalty relief. Here’s what individuals and businesses need to know.
What Is the Voluntary Disclosures Program (VDP)?
The VDP allows individuals and businesses to come forward and correct past tax errors or omissions before the CRA takes compliance action. A successful application can remove penalties and reduce interest — making it a valuable tool for taxpayers looking to fix past mistakes.
What Has Changed in the CRA VDP for 2025?
1. New, Simplified Application Process
Starting October 1, 2025, taxpayers will use a redesigned Form RC199, intended to reduce complexity and speed up submissions.
2. Expanded Eligibility — Even After CRA Contacts You
In the past, CRA communication could disqualify a taxpayer from applying.
Under the new rules, some cases will now qualify as “prompted disclosures.” These submissions may still receive partial relief.
3. Two Tiers of Relief
The revised VDP now includes:
- Unprompted Disclosures
Full penalty relief + up to 75% interest relief - Prompted Disclosures
Up to 100% penalty relief + 25% interest relief
(applies when CRA has contacted you or received third-party information)
4. Shorter Documentation Requirements
Applicants typically only need to provide documents for:
- 6 years — Canadian-sourced income and assets
- 10 years — foreign-sourced income and assets
Previously, CRA often required significantly more.
5. Possibility of Filing a Second Disclosure
In certain cases — such as when the issue is unrelated to the first disclosure — taxpayers may be allowed to submit a second VDP application.
Who Benefits Most From the Updated VDP?
The revised program is beneficial for:
- Small-business owners
- Corporations and holding companies
- Individuals with missed filings
- Investors with foreign assets
- Anyone who received CRA reminders or notices
- Taxpayers who made honest errors
- Businesses with GST/HST or payroll compliance issues
If you run multiple entities — such as a corporation and a hold-co — or hold investment properties, these changes could reduce your compliance risks.
Why These Updates Matter
The revamped VDP expands access, reduces penalties, and simplifies compliance.
Taxpayers who may have avoided the program before — believing they were ineligible — now have more opportunity to come forward without facing harsh consequences.
The result:
A more approachable, flexible path to correcting past errors.
How to Decide if You Should File a VDP Application
Consider a VDP submission if you have:
- Unreported income
- Missed information returns
- Foreign property not reported on Form T1135
- Incorrect GST/HST or payroll filings
- Forgotten slips (T4A, T5, investment income, etc.)
- Past tax errors you want to fix before CRA reviews them
It is almost always better to approach the CRA voluntarily rather than wait for enforcement.
Frequently Asked Questions
1. What is the CRA Voluntary Disclosures Program?
The VDP is a program that allows taxpayers to correct past tax errors and receive penalty and interest relief if they apply before CRA takes enforcement action.
2. What is the difference between unprompted and prompted disclosure?
Unprompted disclosures happen before CRA contacts you and offer greater relief. Prompted disclosures occur after CRA communication and offer partial relief.
3. Does the updated VDP still eliminate penalties?
Yes. Both tiers of the revised VDP provide 100% penalty relief, depending on circumstances.
4. Can I apply to the VDP twice?
Under the new rules, some taxpayers may be allowed to make a second disclosure — especially if it relates to a different issue.
5. When do the new VDP rules take effect?
The changes take effect October 1, 2025.
Final Thoughts
The CRA’s redesigned Voluntary Disclosures Program offers one of the best opportunities to correct past tax issues with minimal financial consequences. With improved access and reduced documentation, more taxpayers can benefit from penalty and interest relief.
Need Help Filing a VDP Application?
If you’re unsure whether you qualify — or want to ensure your application is accepted — we can help.
Contact us for personalized assistance and tax guidance tailored to your situation.
