Behind on CRA filings? How the Voluntary Disclosures Program works
Published on Published
Since 1 October 2025 the program has one set of rules. Applying before the CRA contacts you earns the most relief, and applying after it has written to you still earns partial relief.
Download the checklist · text file
The Voluntary Disclosures Program (VDP) lets a taxpayer or registrant correct a return, or file one that is missing, and ask the CRA to reduce the penalties and part of the interest. It does not reduce the tax itself. You still pay every dollar of tax you owe.
What the program can take off
| Your application is | Penalties | Interest |
|---|---|---|
| Unprompted: you came forward before the CRA contacted you about the issue | 100% of penalties | 75% of interest |
| Prompted: the CRA has already contacted you about the issue (partial relief) | Set by the CRA, and can be less than in full | 25% of interest |
Before 1 October 2025, a taxpayer the CRA had already contacted about an issue generally could not use the program. Applications made after that contact can now qualify for partial relief. The CRA defines a prompted application as one made after it has identified a specific error or omission, set a deadline to correct one, or received third-party information about you, and its definition excludes education letters. Read the CRA’s page for the exact test.
A fictional example. A corporation filed three years late and owes CAD 8,000 in penalties and CAD 2,000 in interest on top of its tax. If its application is unprompted and accepted, the CAD 8,000 in penalties is waived and 75% of the interest, CAD 1,500, is waived. If it applied after the CRA had contacted it, the interest relief would be 25%, CAD 500, and the CRA would decide how much of the penalties to waive. The tax itself is still owed either way. The figures are invented.
What it is for, and what it is not for
- Returns never filed: a T2, a T1, or GST/HST returns
- Income that was left off a return, or expenses claimed that should not have been
- Other missed obligations that the CRA’s program page lists as covered
The CRA continues to restrict the program for anyone already under audit or investigation for the matter, and for conduct it considers egregious. Read its eligibility page before you rely on the program, and do not assume a particular situation qualifies.
Why timing matters more than anything else
The gap between the two rows in the table above is the reason to move early. Once the CRA has contacted you about a specific error or omission, your application counts as prompted, and the relief drops. A letter you have received and not answered is not a reason to wait. Ignoring it does not stop the clock on penalties or interest.
Where the bookkeeping comes in
An application asks for the missing or corrected figures, and the CRA relies on them. Those figures come from books that are complete and reconciled, so for most people the work is: catch up the records for the affected periods, reconcile them, prepare the returns from them, then apply with the figures in hand.
What is the CRA Voluntary Disclosures Program?
A program under which you can correct a return, or file one that is missing, and ask the CRA to reduce penalties and part of the interest. It does not reduce the tax owing.
How much relief does the VDP give?
From 1 October 2025, an unprompted application generally gets 100% relief from penalties and 75% from interest. A prompted one gets 25% relief from interest, and the CRA decides how much of the penalties to waive. The CRA decides each application.
Can I apply after the CRA has sent me a letter?
Often yes, since 1 October 2025: an application made after CRA contact can qualify for partial relief. It depends on the letter, because the CRA’s definition of a prompted application excludes education letters. Someone already under audit or investigation for the matter is generally excluded.
Does the VDP cancel the tax I owe?
No. It addresses penalties and part of the interest only. You pay the full tax owing.
Should I fix the books before I apply?
Usually yes, because the application relies on accurate figures for each period. Catching up the books is normally the longest part of the process.
Catch-up bookkeeping checklist →
A CRA letter has arrived: what to do first →
Want this handled for you
This is the work we do for clients every month. Tell us what you sell and where your books stand, and a written plan and a fixed monthly price follow within one business day.
info@orbisaccounting.ca