Apr 11, 2022 | Tax

Canada’s Voluntary Disclosure Program provides a way for taxpayers to approach the CRA in order to resolve errors and omissions in their existing tax returns. The program provides relief to Canadians who come forward to fix their own errors before the CRA contacts them. This will help increase tax compliance, insure more complete records, and reduce the investigative burden on the CRA.

Understanding the Basics of VDP

The first thing to understand about VDP is that you have to come forward before you hear from the CRA. This is a key factor, because if they have already contacted you then it can be argued that it’s not entirely voluntary. Beyond that, there are a number of other criteria that every application has to meet in order to be eligible. It’s also important to understand when you should apply to the VDP rather than for a simple T1 adjustment.


The application has to include every piece of documentation and information necessary to resolve the issue. You have to disclose every taxation year that might be affected by the error or omission, and include each return, every form, and all the schedules involved.


The big difference between the VDP and a T1 adjustment has to do with the year or years you are applying for. A T1 adjustment applies to the current taxation year, while you can only apply for VDP when you’re dealing with information that’s at least one year past its filing due date.


In order to make an application you also have to be facing at least a potential penalty. This part is simple; you don’t need relief when there isn’t a penalty.


Finally, you need to include a payment of the estimated tax outstanding. This is not a way to gain relief from your existing tax debts, but only a way to help offset additional penalties that would be applied over and above your existing liabilities. Taxpayers who cannot make payment in full can submit a request for a payment arrangement.

Changes to the VDP

In December of 2017, the Honourable Diane Lebouthillier, then Minister of National Revenue, announced a series of changes to the program in order to make it fairer for the average Canadian. In addition to introducing the payment requirements referenced above, these changes also split the program into two: a General Program for taxpayers seeking assistance resolving unintentional errors and omissions, and a Limited Program for those who had intentionally sought to avoid their tax liability. In addition to the introduction of the payment requirement and the Limited Program, the revised program also included the following changes:

Relief Cancellation

Under the new program, the CRA is empowered to cancel a taxpayer’s relief if it subsequently determined that the taxpayer provided an incomplete application due to misrepresentation of their circumstances.


In the first iteration of the program, taxpayers and their authorized representatives were able to make disclosures without revealing names. That shield of anonymity is no longer present under the new program that came into effect on March 1, 2018.

What Kind of Relief is Offered?

The VDP offers three basic forms of relief, all of which are available to taxpayers on the General Program track. Those on the Limited Program track receive less relief, but they do receive enough relief that it is worth entering the program regardless of which track any particular taxpayer qualifies for. The base types of relief are:

Criminal Prosecution Relief

All taxpayers accepted into either track of the current program are eligible for relief from prosecution on criminal tax evasion charges. This is probably the biggest factor.

Penalty Relief

Taxpayers on the General Program are eligible for penalty relief as well as relief from criminal prosecution. Those on the Limited Program will only be eligible for relief from gross negligence penalties.

Interest Relief

General Program taxpayers are also eligible for partial interest relief. However, those on the Limited Program are not eligible for any interest relief.

So How Do You Know Which Track You Qualify For?

While most individual taxpayers who qualify for the VDP are eligible for the General Program, there are cases where a person may only be able to take advantage of the Limited Program. The core differentiation depends on two factors: Intention and scale. In general the Limited Program applies when there is an element of intentional conduct, or when the application is made by a large corporation, one with over $250 million of gross revenues.

Looking at the case of individual taxpayers, there are four factors that CRA uses in order to evaluate whether to offer a taxpayer access to the General Program or insist that they only disclose their tax information under the Limited Program:

  • Amount: In general, the CRA is more likely to consider the Limited Program for cases where larger amounts of money are involved.
  • Duration: The CRA also considers the number of years the taxpayer was out of compliance before making a decision.
  • Concealment: Whether the taxpayer made any efforts to conceal the non-compliance from the CRA will also be taken into account.
  • Sophistication: The taxpayer’s knowledge and understanding of applicable tax codes is also a factor. The more sophisticated the taxpayer, the less likely they are to make a simple mistake out of ignorance.


While the VDP can be a very powerful tool for anyone with past tax issues that they are looking to deal with, it is not something you should undertake lightly. It is a serious matter and you need to contact an accountant or tax professional before moving forward. Take the time to put yourself in the best place to bring yourself back into compliance by getting the help and guidance you need before contacting the CRA.

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