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This article provides general information about the Canada Revenue Agency's Voluntary Disclosures Program as of October 2026 and is not legal advice or tax advice. It draws on CRA Information Circular IC00-1R7 (which governs applications received on or after October 1, 2025), the CRA's program pages and quarterly prescribed interest rates, the Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.), ss. 152, 162, 163, 165, 220 and 248, and the Ontario Ministry of Finance's voluntary disclosure policy.
A CRA voluntary disclosure is worth the most on a morning when nothing has arrived in the mail. Since October 1, 2025, the Canada Revenue Agency no longer asks only whether you came forward. It asks what it had already sent you when you did, and the answer moves your interest relief from 75% to 25%, or takes it away entirely.
That makes this a guide organized by envelope. If you left income off a return, skipped a year of filing, or never reported a foreign account, the program can still take most of the sting out of it, provided you understand which letter you are holding. It sits under our wider guide on when to hire a tax lawyer in Canada, and if you would rather have someone review your file before anything goes to the CRA, Olanur can match you with a lawyer who takes tax matters, free.
CRA voluntary disclosure in 2026, in five lines
The Voluntary Disclosures Program (VDP) lets a taxpayer correct past errors or omissions and, if the CRA grants relief, avoid penalties, part of the interest and criminal prosecution. The tax itself is always paid.
- Come forward first, keep most of the money. An unprompted application normally gets 100% of penalties and 75% of interest waived, under Information Circular IC00-1R7, para. 21.
- A letter cuts the relief, it no longer ends it. A prompted application, made after the CRA has named a specific problem, normally gets up to 100% of penalties and 25% of interest waived.
- An audit or investigation shuts the door. Once one has started on the issue, against you or a related taxpayer, the application is not voluntary at all.
- Five conditions, all required. Voluntary, complete, at least one year past the filing due date, involving interest or a penalty, and paid (or a payment arrangement requested).
- No prosecution, no gross negligence penalty. Every eligible application gets both protections, whichever tier it lands in.
Read the mail before you read the rules
Your relief depends less on what you did wrong than on what the CRA had already sent you when you applied. The circular sorts contact into kinds, and each kind lands in a different place.
Under the old rules, in force for applications received from March 1, 2018 to September 30, 2025, almost any direct contact from the CRA about non-compliance counted as "enforcement action" and could disqualify an application. The new circular replaced that single gate with a sorting exercise. Pick the most serious thing you have received about the issue you want to fix:
Built from CRA Information Circular IC00-1R7 (applications from 1 October 2025)
What's in your mailbox decides your relief
Pick the most serious thing you have received about the issue you want to correct.
Choose an envelope above to see the relief the CRA normally attaches to it.
Sources: CRA Information Circular IC00-1R7, paras 10, 11, 17 and 19 to 27; CRA, Changes to the Voluntary Disclosures Program (1 October 2025). A self-check, not a decision: the CRA says relief is normally granted at these levels and decides each application on its own merits. Not legal or tax advice.
The sections that follow take each envelope in turn, starting with the one most people hope they are holding when they first consider a CRA voluntary disclosure.
No letter, or only a general one: the 75% door
An application is unprompted when there has been no communication, verbal or written, about an identified compliance issue related to the disclosure. It normally earns general relief: 100% of penalties and 75% of interest waived.
The surprise in the new rules is the education letter. The CRA sends education letters and notices that offer general guidance and filing information on a particular topic, and IC00-1R7, para. 19 says an application made after one of those is still generally unprompted. The CRA's own summary of the changes gives "an education letter about unreported income or claimed ineligible expenses" as the example of a communication that no longer locks anyone out.
Consider a graphic designer in Mississauga who filed her 2022 return on time but left out the freelance income she earned on the side, enough that $10,000 of tax went unpaid. By October 1, 2026, at the CRA's own published rates compounded daily, about $3,270 of interest has built up on that balance. If she applies before anything arrives, general relief waives roughly $2,453 of it and she pays the $10,000 plus about $818. Had she never filed the return at all, a late-filing penalty of $1,700 would sit on top, and general relief would waive that too.
A letter that names the problem: still in, at 25%
A prompted application is one made after the CRA has identified a specific error or omission on your account, or set a deadline to file or fix it. It still qualifies, and normally earns partial relief: up to 100% of penalties and 25% of interest waived.
This is the largest change in the 2025 rules. Under the old circular, a CRA request or demand about unfiled returns was treated as enforcement action, and could make an application not voluntary for every tax year, not just the one in the letter. Now the same letter moves you down a tier rather than out of the program.
Consider a landlord in Hamilton who receives a letter naming rental income missing from his 2023 return, with a date to respond by. Say the missing income left $6,000 of tax unpaid. About $1,251 of interest has accrued by October 1, 2026. As a prompted applicant he would normally keep paying about $938 of it, where an unprompted application, made before the letter, would have left about $313. The letter itself cost him roughly $625 in interest.
The envelope you never see
An application is also generally prompted when the CRA has already received information from third-party sources about the potential involvement of a specific taxpayer, or a related taxpayer, in non-compliance (IC00-1R7, para. 20). Nothing has to reach your mailbox for this to apply. It is one of the reasons people who think the CRA may already know something often choose to talk the timing through with a lawyer before filing.
An audit or investigation: the door that shuts
An application is not voluntary if an audit or investigation has been initiated against you, or a related taxpayer, in respect of the information being disclosed. Without a voluntary application, there is no VDP relief at either tier.
Two details in IC00-1R7, para. 17 catch people out. The audit does not have to be a CRA audit: investigations by a law enforcement agency, a securities commission or another federally or provincially regulated authority count. And it does not have to be your audit: one opened on a related taxpayer, such as your corporation, can close the door on the same information.
If you are already there, the program is no longer the tool. What happens during a review is covered in our guide to CRA audits and their common triggers, and if a reassessment follows that you disagree with, the CRA tax dispute process, starting with a notice of objection, is where the fight moves.
What the letter costs, in dollars
The gap between the two tiers is half of the interest, because general relief waives 75% and partial relief waives 25%. On a balance that has been unpaid for years, at rates that reached 10% in 2024, that half is real money.
The chart below runs the arithmetic on the CRA's actual quarterly rates for overdue taxes, published on its prescribed interest rates page, compounded daily as section 248(11) of the Income Tax Act requires. Pick an amount, a tax year and whether the return was filed.
Computed from the CRA's quarterly overdue-tax rates (2022 to 2026) and IC00-1R7 relief levels
What the letter costs: one tax bill, three outcomes
Interest to 1 October 2026, compounded daily. The faded part of each bar is what the program waives.
The CRA finds it first
No program relief
$3,270
Interest $3,270 · plus the $10,000 of tax
Prompted application
Partial relief: 25% of interest, up to 100% of penalties
$2,453
Interest $2,453 (waived $818) · plus the $10,000 of tax
Unprompted application
General relief: 75% of interest, 100% of penalties
$818
Interest $818 (waived $2,453) · plus the $10,000 of tax
On $10,000 of 2022 tax, a letter from the CRA before you apply costs about $1,635 in extra interest. Waiting for the CRA to find it costs $2,453 more than coming forward first.
Illustrative figures for an individual whose balance was due 30 April after the tax year. Interest: Income Tax Act s. 248(11), at the CRA's published overdue-tax rate for each quarter (5% to 10%), daily rate = annual rate ÷ 365; the CRA's own figure will differ slightly. Penalty: s. 162(1), 5% plus 1% a month for 12 months, the maximum once a return is a year late. Not included: interest on the penalty, and the 50% gross negligence penalty (s. 163(2)), which applies where a false statement or omission was made knowingly or through gross negligence, so the top bar is a floor. Relief: IC00-1R7, paras 21 and 22. Years before 2021 are left out because the CRA's 2020 COVID-19 interest waiver changes their arithmetic. Not tax advice.
Two things the bars make plain. Interest is the part that grows, so the cost of waiting compounds; our guide to CRA collections shows the same effect on a debt that is already assessed. And for an unfiled return, the late-filing penalty under section 162(1) of the Income Tax Act is already at its 17% maximum by the time a year has passed, which is the earliest the program will take it.
How the Voluntary Disclosures Program changed on October 1, 2025
The 2025 overhaul replaced a two-track program, judged largely on intent, with two tiers judged on timing. Most of the advice on CRA voluntary disclosure still circulating online was written for the old version.
| Before October 1, 2025 (IC00-1R6) | From October 1, 2025 (IC00-1R7) | |
|---|---|---|
| Tracks | General Program and Limited Program, the latter for disclosures with an element of intentional conduct | Unprompted (general relief) and prompted (partial relief) |
| Penalties | General: none charged. Limited: gross negligence penalties waived, other penalties charged | Unprompted: 100% waived. Prompted: up to 100% waived |
| Interest | General: generally 50% relief, but only for years before the three most recent; full interest on those three. Limited: no relief | Unprompted: 75% relief. Prompted: 25% relief |
| Direct CRA contact about non-compliance | Could count as "enforcement action" and make the application not voluntary | An education letter keeps it unprompted; a letter naming a specific error makes it prompted, still eligible |
| Audit or investigation | Not voluntary | Not voluntary |
The old Limited Program also required applicants to waive their rights to object and appeal on the matter disclosed. IC00-1R7 has no Limited Program and contains no equivalent waiver. Applications received before October 1, 2025 are still decided under IC00-1R6.
The five conditions, and the paperwork behind them
Relief requires all five of the CRA's eligibility conditions: the application is voluntary, complete, involves interest or a penalty, covers information at least one year past its filing due date, and comes with payment or a payment arrangement request.
The "complete" condition carries most of the work, because the circular is specific about what complete means:
- Six years of documents (returns, forms, statements, schedules) to correct Canadian-sourced income or assets, and ten years where the income or assets are outside Canada (IC00-1R7, para. 27). For GST/HST the window is the most recent four years.
- Only the years with errors. A year inside the window with nothing wrong does not need to be included, although the CRA can ask for more.
- Every known error, not just the one that worries you. An application can be denied if the CRA learns of other non-compliance that was left out (para. 31).
- The name of anyone who advised you on the subject of the disclosure, including a tax professional or promoter (para. 30).
- Form RC199, signed by you and, if one submits it for you, your authorized representative too.
Payment is the fifth condition. The estimated tax goes in with the application, or you ask for a payment arrangement, which CRA collections officials must approve and which is not guaranteed (para. 32).
Before you file: the anonymous call
If you are unsure whether to apply, the CRA offers a pre-disclosure discussion, requested through its online callback form or by phone (1-800-959-8281 for individuals, 1-800-959-5525 for businesses). It can happen before you give your name. The CRA describes these discussions as informal and non-binding: they guarantee no relief, and they do not limit its ability to audit or penalize you.
Once the application is in, the CRA sends an acknowledgement with an effective date of disclosure, and any relief granted runs up to that date (para. 33). It can be submitted through My Account, My Business Account or Represent a Client, by fax, or by mail to the Shawinigan National Verification and Collections Centre.
What a voluntary disclosure will not do
The program reduces penalties and interest; it does not reduce tax. The CRA's starting principle is that a taxpayer who follows the rules should not end up worse off than one who uses the VDP (IC00-1R7, para. 2).
- It is not debt forgiveness. Every dollar of tax is still owed. What the CRA can and cannot write off is covered in our explainer on what "CRA debt forgiveness" actually means.
- It does not reopen what is already assessed. Penalties and interest the CRA has already charged are outside the program; the taxpayer relief provisions under section 220(3.1) are the usual route for those, as our guide to CRA tax penalties explains.
- It does not cover refunds, elections or insolvency. Returns that only produce a refund, requests to make or change an election, and years touched by an insolvency event are all excluded (para. 11).
- It does not end the CRA's interest in the file. The CRA can still audit anything in an application, and where it finds misrepresentation from neglect, carelessness or wilful default, or fraud, it can reassess outside the normal three-year period (s. 152(4)).
- It is not a second chance forever. After relief, the CRA expects you to stay compliant, and it may consider a later application only if the circumstances were beyond your control or involve a different matter (para. 12).
If the CRA says no
A decision on a CRA voluntary disclosure cannot be objected to. Section 165(1.2) of the Income Tax Act bars objections to assessments made under section 220(3.1), so the routes are a second administrative review, then judicial review in the Federal Court.
The CRA's page on its review and decision process sets out both steps. The second review is requested in writing from the Assistant Director of the Shawinigan centre, and a new officer who was not involved in the first decision can be assigned to it. If that also fails, the circular notes that an application for judicial review under section 18.1 of the Federal Courts Act has to be filed within 30 days from the date the CRA sent its decision (para. 41). It is the route for a taxpayer who believes the CRA did not exercise its discretion in a fair and reasonable manner.
Ontario taxes the CRA's program does not reach
The CRA administers both federal and Ontario personal income tax, according to Ontario's own filing guidance, and the GST/HST is covered by the federal program too (IC00-1R7, para. 4). Those travel with a federal VDP application. Taxes the Ontario Ministry of Finance administers itself do not.
For those, Ontario runs its own voluntary disclosure policy, and it is not a copy of the federal one:
| CRA Voluntary Disclosures Program | Ontario voluntary disclosure policy | |
|---|---|---|
| Covers | Income tax, GST/HST, source deductions and other federal levies | Ontario-administered statutes, including the Employer Health Tax Act, Land Transfer Tax Act, Estate Administration Tax Act, 1998, Retail Sales Tax Act and Tobacco Tax Act |
| Interest | 75% or 25% waived, by tier | All amounts owing, including interest, must be paid |
| Prosecution | No referral if relief is granted | No prosecution for a valid disclosure |
| Anonymous first step | Pre-disclosure discussion | Anonymous discussion, which may come with a 90-day grace period to prepare the disclosure |
| Closed by | An audit or investigation on the issue | Any ministry enforcement action |
Two Ontario cases where this matters. An employer that underpaid Employer Health Tax, and an estate trustee who finds that an asset was left off the Estate Information Return, which our guide to probate fees in Ontario walks through, both deal with the province, not the CRA. Ontario's page also encourages people with federal obligations to consider a disclosure there too, so one problem can mean two applications.
When it helps to talk to a tax lawyer first
Many people apply on their own, and the CRA's June 2026 tax tip says the October 2025 update made that easier. A few situations are worth a professional read before anything is sent, because the first filing sets the tier.
- Foreign accounts or assets. Ten years of documents, and reporting forms such as the T1135 foreign income verification statement, multiply the work and the room for error.
- You suspect the CRA already knows. Whether third-party information has reached the CRA decides between the 75% and 25% tiers, and timing becomes the whole question.
- A related person or company is under review. An audit of a related taxpayer on the same information can make your application not voluntary.
- The facts look deliberate. The program protects against gross negligence penalties and prosecution only once an application is eligible, so the way the facts are presented matters.
- You cannot pay the tax. A payment arrangement request goes to collections officials and is not guaranteed.
There is also a structural reason people choose a lawyer here. Conversations with a lawyer for the purpose of legal advice can be protected by solicitor-client privilege in a way that conversations with other advisers may not be, which matters when the subject is something not yet disclosed. Our guide to what a lawyer costs in Ontario explains how fees are usually structured, and before you hire anyone, the lawyer lookup guide shows how to confirm a licence with the Law Society of Ontario.
How Olanur helps
We built Olanur so that someone holding an envelope they have not opened yet does not have to start by cold-calling firms. A voluntary disclosure is narrow work, and a lawyer who is excellent at incorporations may not be the right person for six years of unreported income.
You describe the situation in plain language, and nothing goes to the CRA. Our matching system puts it in front of lawyers on our platform who take tax matters. Matching is free, every professional on our platform is licensed, and you see each lawyer's background and consultation fees before you book. Start from find a lawyer if the issue is personal, or from the business law page if it sits in a company. Our guide to finding a lawyer in Canada walks through the search itself.
Frequently asked questions
No. A CRA voluntary disclosure never reduces the tax itself, which has to be paid in full. What it can reduce is the rest: an unprompted application normally gets 100% of penalties and 75% of interest waived, and a prompted one up to 100% of penalties and 25% of interest, under IC00-1R7.
Usually yes, since October 1, 2025. A general education letter leaves the application unprompted. A letter naming a specific error, or setting a deadline to comply, makes it prompted, which still qualifies for partial relief. Only an audit or investigation on the information being disclosed makes the application not voluntary.
It is the normal reassessment period. For individuals, the CRA generally has three years from the date of the original notice of assessment to reassess a return, under section 152(3.1) of the Income Tax Act. It can go further back where there was misrepresentation from neglect, carelessness or wilful default, or fraud, and an unfiled return has no assessment to start the clock.
Yes. The CRA offers a pre-disclosure discussion, requested through its online callback form or the general enquiry lines, which can take place before you give your name. It is informal and non-binding, does not guarantee relief, and does not stop the CRA from auditing or penalizing you later. The application itself is made in your name on Form RC199.
The CRA's June 2026 tax tip says coming forward through the program is not a trigger for increased surveillance of your future tax filings. The circular also says the CRA reserves the right to audit or verify anything in an application, whether or not relief is granted, so accurate and complete disclosure matters.
You can ask for a payment arrangement for the estimated tax instead of paying it with the application. CRA collections officials review every request and approval is not guaranteed. Without either payment or a request for an arrangement, the application does not meet the conditions for relief, and interest continues to run on what is unpaid.
Before the next envelope
If nothing has arrived, the arithmetic favours moving while that is still true: gather the returns and statements for the years in the six or ten year window, list every error rather than the one that worries you most, and work out the tax so it can be paid or covered by an arrangement. A pre-disclosure call can test the waters without your name.
If a letter has already arrived, read it for one thing first: whether it names a specific problem or offers general guidance, because that decides the tier. And if the timing, the facts or a related company make the answer unclear, a lawyer matched through Olanur can review the file with you before the CRA sees it.
Anita Rouzbeh
Tax & Business Law Contributor
Anita covers Canadian tax law and corporate legal matters, including CRA audits, tax disputes, business compliance, and tax planning for individuals and small businesses.
