CRA Updates to the Voluntary Disclosures Program
On September 10, 2025, the Canada Revenue Agency (CRA) released Information Circular IC00-1R7, updating the Voluntary Disclosures Program (VDP). These new rules apply to applications filed on or after October 1, 2025, and significantly affect how taxpayers can come forward to correct past non-compliance. For taxpayers considering disclosure, understanding these changes is critical and consulting a Toronto tax lawyer can help you navigate the new rules effectively.
What Is the Voluntary Disclosures Program?
The VDP allows taxpayers to correct past errors or omissions before the CRA discovers them. If accepted, a taxpayer may avoid penalties, reduce interest, and ensure they are not referred for criminal prosecution. Taxes owing must still be paid in full or subject to a payment arrangement. The program applies broadly, covering income tax, GST/HST, withholding taxes, excise duties and taxes, the fuel charge, the luxury tax, the underused housing tax, and even the upcoming digital services and global minimum taxes.
Eligibility Requirements
To qualify under the updated program, an application must be:
- Voluntary, meaning it is filed before the CRA initiates an audit, investigation, or enforcement action regarding the issue.
- Complete, with all errors disclosed, supported by relevant documentation for the past six years, or ten years if foreign assets or income are involved.
- Accompanied by payment or a request for a payment arrangement of the estimated taxes owing.
Relief is not available where a disclosure results in a refund, relates only to existing penalties or interest, or depends on treaty-based negotiations. A Toronto tax lawyer can assess whether your circumstances meet the CRA’s strict eligibility requirements.
Unprompted vs. Prompted Applications
The new rules continue to draw a distinction between unprompted and prompted disclosures.
- Unprompted applications: Filed before the CRA has made specific contact about the non-compliance. These generally qualify for 100 percent penalty relief and 75 percent interest relief.
- Prompted applications: Filed after CRA correspondence or third-party information raises the issue. These qualify for up to 100 percent penalty relief but only 25 percent interest relief.
Regardless of category, accepted disclosures always protect the taxpayer from prosecution and gross negligence penalties on the disclosed matters.
CRA Review and Discretion
The CRA retains broad discretion to deny relief where disclosure is incomplete or information is withheld. Importantly, CRA officials may request additional documentation beyond the standard six- or ten-year window if they believe it is necessary. While the VDP provides protection against penalties and prosecution, it does not prevent the CRA from reassessing tax owing, subject to statutory limitation periods.
Rights of Redress
If the CRA denies relief, taxpayers can request a second-level administrative review at the Shawinigan National Verification and Collections Centre. If that fails, judicial review may be available at the Federal Court within 30 days of the decision. Notably, there is no right of objection for VDP decisions, making early strategic advice critical.
Why These Changes Matter
The updated Information Circular expands the Voluntary Disclosures Program to cover GST/HST, excise duties, the luxury tax, and several other federal taxes. This makes it easier for businesses and individuals with exposure beyond income tax to come forward. At the same time, the CRA continues to apply strict conditions and limited interest relief, reflecting its goal of encouraging voluntary compliance without rewarding deliberate avoidance.
Kirshen Tax Law Can Help
If you are considering a voluntary disclosure, the timing and framing of your application can determine whether you receive full relief, partial relief, or are denied entirely. At Kirshen Tax Law, we have extensive experience navigating the CRA’s Voluntary Disclosures Program and ensuring taxpayers secure the maximum available protection.
Contact us today for a free consultation with a Toronto tax lawyer.
Jeff Kirshen BA, JD (CA), JD (US)
Tax Lawyer | Founder, Kirshen Tax Law
Disclaimer
The content on this website, including articles and blog posts, is provided for general informational purposes only. It reflects the laws and regulations as of the date of publication, which may have since changed. This content is not intended to serve as legal advice and should not be relied upon as such. Tax laws and situations can be complex and unique to each individual. The information provided may not apply to your specific circumstances. For personalized advice regarding your tax or legal matters, we recommend consulting a qualified lawyer.