Not everyone who files late or misses income does so intentionally. Life gets complicated — careers change, foreign accounts get opened and forgotten, and some people simply fall behind on multiple years of returns. If you have tax issues you have not disclosed to CRA, the Voluntary Disclosures Program (VDP) exists for exactly this situation.
What the VDP is (and is not)
The VDP is part of CRA’s Taxpayer Relief framework. It is designed to encourage compliance by offering a deal: come forward before we find you, and we will reduce the consequences.
What the VDP does:
- Cancels civil penalties on qualifying disclosures
- May reduce accrued interest (General Program only)
- Reduces or eliminates risk of criminal prosecution for tax evasion
What the VDP does not do:
- Forgive the underlying tax you actually owe
- Eliminate all interest on unpaid tax
- Protect you once CRA has already initiated contact about the specific issue
The two VDP tracks
CRA split the VDP into two tracks in 2018:
General Program
For most taxpayers — those who did not deliberately evade taxes on a large scale.
Relief available:
- Civil penalties: cancelled in full
- Interest: partial relief possible, typically 50% on interest for years more than 3 years old
Who qualifies: Individuals and businesses with income omissions, unfiled returns, or foreign reporting failures that were not obviously deliberate large-scale evasion.
Limited Program
For situations involving “major non-compliance” — large dollar amounts, sophisticated structures, repeated use of offshore accounts, or situations where CRA considers the non-compliance deliberate.
Relief available:
- Civil penalties: cancelled
- Interest: no relief — you owe all interest in full
Who gets placed here: CRA decides which track applies after reviewing the disclosure. You cannot self-select the Limited Program.
The four eligibility conditions
Your VDP application must meet all four conditions:
1. Voluntary
CRA has not yet contacted you about the specific issue. This includes:
- A letter asking you to file a specific return
- A compliance review notice
- A formal audit initiated on related issues
- A demand to file
If CRA has already reached out about the exact issue you want to disclose, you do not qualify for the VDP for that issue. (You may still qualify for Taxpayer Relief on penalties if you have other grounds.)
2. Complete
You must disclose everything related to the issue — not just some of the unreported income or some of the unfiled years. Partial disclosure disqualifies the application. CRA expects you to come fully clean.
3. One year old or more
The information you are disclosing must relate to something that is at least one year past its due date. You cannot use the VDP to get a quick deadline extension.
4. Involves potential for a penalty or prosecution
There must be an actual risk — the disclosure must fix something that would have attracted a penalty or prosecution had CRA found it themselves.
Common VDP scenarios
| Situation | VDP route |
|---|---|
| 3 years of unfiled personal tax returns | Yes — General Program typically |
| Unreported tips/cash income over several years | Yes — General Program |
| Foreign bank account never reported (T1135) | Yes — may be Limited Program if large |
| Cryptocurrency gains never declared | Yes — General Program or Limited depending on scale |
| Unreported rental income | Yes — General Program |
| GST/HST not collected on self-employment | Yes — General Program |
| Missed RRSP overcontribution reporting | Possible — depends on amount |
How to apply (step by step)
Step 1: Consider an anonymous pre-disclosure consultation
You (or your accountant or tax lawyer) can call CRA’s VDP at 1-866-837-7888 and describe the situation without giving your name or SIN. CRA will advise whether the situation appears to qualify, what track it would fall under, and what relief might be available.
This call has no legal consequences — it is exploratory only.
Step 2: Prepare the full disclosure package
You will need:
- Completed Form RC199 (Voluntary Disclosures Program — Taxpayer Agreement) — available on canada.ca
- Completed tax returns for all unfiled years (T1 Returns, prepared correctly)
- All relevant supporting documents (T-slips, bank statements, foreign account statements)
- A written explanation of why the returns were not filed or income not reported
Step 3: Submit to the VDP
Mail or fax the package to the National Voluntary Disclosures Program Centre:
Mail: National VDP, Shawinigan-Sud Tax Centre, PO Box 3000, STN Main, Shawinigan QC G9N 7S6
Or submit through Represent a Client (if using a tax professional) or the VDP submission portal on My Account.
Step 4: Await acceptance and pay
CRA will review the application and notify you of the accepted relief. You are then expected to pay the remaining taxes and reduced interest by the date specified. The arrangement is not final until you pay.
What happens if CRA contacts you first
If CRA reaches out before you submit a VDP application, the VDP is no longer available for that specific issue. However:
- You may still negotiate a payment arrangement with Collections
- You may still apply for Taxpayer Relief for penalties and interest using Form RC4288 if you have legitimate hardship grounds
- If you have other unreported issues beyond what CRA found, you can still file a VDP for those separate issues
Working with a tax professional
For complex situations — multiple unfiled years, significant foreign assets, or large dollar amounts — working with a tax lawyer (not just an accountant) is worth the cost. Lawyers have solicitor-client privilege, meaning communications about your situation cannot be compelled by CRA. An accountant does not have the same protection.
For simpler cases (a few missed years of T4 income, straightforward unreported freelance income), a CPA can typically handle the VDP application.
Pre-Disclosure Discussion: Testing the Waters
The VDP allows a “no-name” inquiry before you formally commit:
| Feature | Details |
|---|---|
| Anonymous inquiry | Discuss your situation without identifying yourself |
| No commitment | You can decide not to proceed |
| CRA opinion | Preliminary view on eligibility and likely relief |
| Time-limited | 90 days to submit a formal application after the discussion |
How to request: Call the VDP line at 1-866-837-7888 or submit a written request through your tax advisor. Provide general (anonymous) details of the situation; CRA gives a preliminary view; you then decide whether to proceed.
When NOT to Use the VDP
May Not Be Worth It
| Situation | Consideration |
|---|---|
| Very small amounts | Penalties may be minimal — VDP professional fees could exceed the savings |
| Already substantially compliant | May not meet the “involves a penalty” threshold |
| Error is less than one year old | Amend the return normally — VDP requires the issue to be at least one year old |
VDP Not Available — Alternatives
| Situation | Alternative |
|---|---|
| CRA audit already in progress | Cooperate with the audit; apply for Taxpayer Relief (RC4288) separately |
| Criminal investigation underway | Retain a criminal tax lawyer immediately |
| Issue is less than 1 year old | File an amended T1 (T1-ADJ) or use ReFILE through your CRA My Account |
| Bankruptcy or insolvency | May have restrictions — consult your trustee |
T1135 (Foreign Property) and the VDP
Unfiled T1135 forms are one of the most common VDP applications. The penalties for late or missing T1135 reporting are steep:
| Factor | Details |
|---|---|
| T1135 late-filing penalty | $2,500 per year (or $25/day for knowing failure, up to $2,500) |
| Common VDP use | Unfiled T1135 forms for multiple years |
| VDP benefit | All T1135 penalties waived |
| Requirement | Must still file T1135 for all missed years |
Example: If you failed to file T1135 for 5 years, potential penalties total $12,500 or more. Through the VDP, those penalties are waived entirely — you still owe any tax on unreported foreign income plus interest, but the penalty savings alone can be substantial.
Related resources
- How to Set Up a CRA Payment Plan — Once the VDP is accepted, paying the balance
- How to Respond to a CRA Audit — If CRA found you before you came forward
- How to Appeal a CRA Decision — If the VDP relief offered is less than you expected
- Can I Deduct Investment Fees? — Getting future returns right