Mistakes happen, even when it comes to taxes! Whether you forgot to report income, missed a filing deadline, or discovered an error on a previous tax return, the Canada Revenue Agency (CRA) offers a program that may help you get things back on track.
The Voluntary Disclosures Program (VDP) gives eligible individuals and businesses an opportunity to correct past tax errors and potentially receive relief from penalties and interest.
What Is the Voluntary Disclosures Program?
The VDP allows taxpayers to voluntarily disclose information they previously failed to report or correct errors in their tax filings before the CRA contacts them about the issue. The goal is to help taxpayers become compliant while reducing some of the financial consequences of past mistakes.
What Kind of Relief Can You Receive?
Under the updated policy that took effect October 1, 2025, the amount of relief available depends on your circumstances.
Unprompted applications: If you come forward before the CRA contacts you about the issue, you may qualify for 100% penalty relief and 75% interest relief.
Prompted applications: If the CRA has contacted you about a specific tax issue, but you are not currently under audit or investigation, you may qualify for up to 100% penalty relief and 25% interest relief.
In both cases, eligible applicants receive protection from referral for criminal prosecution related to the disclosed information.
Keep in mind: The program provides relief from penalties and interest, not the tax owing itself. You are still responsible for paying any taxes due. Relief generally covers information from up to 10 years before the disclosure date, although different rules may apply to older information.
Is Applying Complicated?
The CRA has made changes to simplify the process and make it more accessible. You can apply on your own or work with a tax professional if you would like assistance preparing your disclosure.
If you are unsure whether the program is right for you, the CRA also offers a free, informal, anonymous pre-disclosure discussion. This gives you an opportunity to ask questions and better understand your options before committing to an application.
Why Should You Consider the VDP?
Leaving a tax mistake uncorrected can lead to additional penalties and interest if the CRA identifies the issue later. Coming forward voluntarily may help reduce these costs and give you greater peace of mind about your tax affairs.
The important thing is not to ignore a mistake simply because it happened in the past. Taking steps to correct it may put you in a better position moving forward.
Need Help Getting Back on Track?
If you have discovered an error in a previous tax return or have questions about an unreported amount, it may be worth exploring whether the Voluntary Disclosures Program is appropriate for your situation.
At Reschke Fritz LLP, we understand that tax matters can sometimes feel overwhelming. Our team can help you understand your options and determine the next steps toward getting your tax affairs in order.