Canada Revenue Agency Updates Voluntary Disclosures Program

On October 1, 2025, the Canada Revenue Agency (CRA) will introduce significant changes to its Voluntary Disclosures Program (VDP). These updates are intended to make the VDP more accessible, fair, and responsive to taxpayers. The CRA explains the changes to its VDP in the following publications:

• CRA webpage, Changes to Voluntary Disclosures Program

• Information Circular IC00-1R7, Voluntary Disclosures Program

• GST/HST Memorandum 16-5-1, Voluntary Disclosures Program (Applications Received On or After October 1, 2025)

The VDP allows taxpayers to voluntarily correct inaccurate or incomplete tax information before the CRA initiates an audit or investigation. In return, eligible VDP applicants may receive relief from penalties and partial interest charges.

Effective October 1, 2025, the changes to the VDP can be summarized as follows:

1. A simplified application process will be introduced with a redesigned and easier to use Form RC199.

2. Taxpayers who have received educational letters or general CRA communications about potential noncompliance will remain eligible for the program.

3. A two-tier relief structure will be introduced, with:

   • General relief (100% of penalties and 75% of interest) available to taxpayers with unprompted disclosures; and

   • Partial relief (up to 100% of penalties and 25% of interest) for prompted disclosures.
     A prompted disclosure refers to a situation where the taxpayer may have received general CRA communications about a compliance issue, but an audit has not been initiated.

4. Relaxed eligibility criteria will be used, allowing disclosures where an audit or investigation has not already started, and prior CRA inquiries or requests for missing returns will no longer automatically disqualify applicants.

5. Guidelines for disclosure documentation requirements will be used and, in most cases, the CRA will only require information for years with errors or omissions. For situations involving multiple years, a taxpayer will be required to provide documentation for:

   • 10 years in relation to foreign-sourced income or assets;

   • 6 years in relation to Canadian-sourced income or assets; and

   • 4 years for issues related to GST/HST.

   The CRA will retain the right to require documentation pertaining to tax years beyond the required timeframes noted above.

6. The VDP will be expanded to include issues related to the Digital Services Tax, Greenhouse Gas Pollution Pricing Act (Part I for fuel charges), Underused Housing Tax, Global Minimum Tax, and Luxury Tax, in addition to the Income Tax Act, Excise Tax Act, Air Travellers Security Charges Act, and the Softwood Lumber Products Export Charges Act.

These changes should provide a more balanced and taxpayer-friendly approach, offering greater clarity to those looking to correct past errors. Taxpayers that have been hesitant to come forward because of prior CRA communications or uncertainty about eligibility should reconsider the VDP, as a successful application can avoid costly penalties and lower the interest cost.

The material presented in this communication is intended to provide general information only and should solely be seen as broad guidance and not directed to the particular facts or circumstances of any individual who may read this publication. No liability is accepted for acts or omissions taken in reliance upon the content of this piece. Before taking (or not taking) any action, readers should seek professional advice specific to their situation from Ryan, LLC or other tax professionals.