Beginning October 1, 2025, the Canada Revenue Agency (CRA) will be introducing major updates to its Voluntary Disclosures Program (VDP). This program has long been an important tool for taxpayers who need to correct mistakes or omissions in their tax filings before the CRA reaches out to them. By making a voluntary disclosure, Canadians can often reduce or avoid penalties and prosecution, providing peace of mind when past errors come to light.
One of the biggest changes is the expansion of eligibility. In the past, taxpayers who had already been contacted by the CRA were generally ineligible to apply. With the new rules, the program will be open even to those who have received “education letters” from the CRA pointing out potential issues in their returns. This shift recognizes that many errors are unintentional and gives more Canadians a chance to make things right.
Another important update is the introduction of two levels of relief. Applications will be reviewed as either unprompted or prompted. Unprompted disclosures, where the taxpayer comes forward before the CRA flags the problem, will continue to receive higher levels of relief. Prompted disclosures, where the CRA has already raised concerns, will still be eligible for reduced relief, rather than being excluded altogether. This change is expected to increase participation and provide a fairer process.
Finally, the CRA is streamlining the VDP process to make it more user-friendly. Updated forms, simpler language, and clearer guidance will help taxpayers understand their obligations and submit applications more easily. For individuals and businesses alike, these changes are a signal that the CRA wants to encourage voluntary compliance rather than punish honest mistakes. Anyone who believes they may have past reporting issues should consider reviewing their filings and consulting with a tax professional ahead of the October changes.
