The Canada Revenue Agency (CRA) has updated its Voluntary Disclosure Program Canada 2025, introducing clearer rules, expanded eligibility, and broader tax coverage. The program is designed to give taxpayers—whether individuals, corporations, partnerships, or trusts—a chance to correct past tax errors or omissions before facing penalties or prosecution.

Under the new guidelines, taxpayers who voluntarily come forward may receive full penalty relief and significant interest reductions, depending on whether their disclosure is made before or after the CRA initiates contact. These changes simplify the process, making it easier to understand when relief applies and how much can be granted.

For Canadian taxpayers concerned about unreported income, overstated expenses, or missed filings, the 2025 updates create a more transparent and predictable pathway to compliance. This blog breaks down the key changes, explains how the program works, and outlines what they mean for taxpayers moving forward.

Overview of the CRA’s Voluntary Disclosure Program

The Voluntary Disclosure Program Canada 2025 gives taxpayers an opportunity to correct errors or omissions in their tax filings without facing the full weight of penalties or prosecution. It is intended as a second chance for those who want to bring their tax affairs back into line with CRA requirements.

Through the program, eligible applicants can receive relief from penalties and, in many cases, a reduction in interest charges. The degree of relief depends on the timing and nature of the disclosure, but the program consistently rewards taxpayers who come forward voluntarily rather than waiting for the CRA to act.

The VDP Program is open to a wide range of taxpayers, including:

By offering a structured pathway to correct past mistakes, the CRA encourages proactive compliance while maintaining fairness. For taxpayers with unreported income, overstated expenses, or missed filings, the VDP provides a clear route to resolve issues and avoid the harsher consequences of enforcement.

What Changed from 2017 to 2025?

Program Design: General vs. Prompted and Unprompted

One of the most significant changes in the Voluntary Disclosure Program Canada for 2025 is the restructuring of its application categories.

  • Old system (2017): The program was divided into the “General Program” and the “Limited Program.” Taxpayers often struggled to understand the differences, and those placed in the Limited Program faced reduced relief and fewer benefits.
  • New system (2025): The CRA has simplified the structure by replacing these categories with “Prompted” and “Unprompted” disclosures.

Unprompted disclosures are made before the CRA contacts a taxpayer about a compliance issue. These applications receive the strongest relief, including full penalty relief and significant interest reductions.

Prompted disclosures are filed after the CRA has already reached out about possible non-compliance. While these applications provide less generous relief, taxpayers may still qualify for penalty relief and partial interest relief—an option not available under many scenarios in the old system.

This redesign makes the VDP easier to navigate, giving taxpayers more certainty about what relief is available based on when they disclose.

Voluntary Disclosure Program: 2017 vs. 2025

Area 2017 Rules 2025 Rules
Program Design “General” and “Limited” categories “Unprompted” and “Prompted” categories
Voluntary Standard Disclosure considered non-voluntary if CRA had sent audit/investigation notice or even an education letter Non-voluntary only if CRA has started formal enforcement; general notices may still qualify as “prompted”
Penalty Relief General program: full relief; Limited program: reduced relief Unprompted: full penalty relief; Prompted: partial penalty relief
Interest Relief General program: 50% for older years, none in Limited program Unprompted: 50–75% reduction; Prompted: 25% reduction
Large Corporations Corporations with >$250M gross revenue excluded from full relief All corporations eligible, regardless of size
Scope of Taxes Income tax, GST/HST, source deductions, excise Income tax, GST/HST, source deductions, excise plus Fuel Charge, Luxury Tax, UHT, DST, Global Minimum Tax
Waiver of Rights Applicants had to waive objection/appeal rights Taxpayers retain objection/appeal rights (except penalty and interest relief decisions)

Voluntary Standard: When Is a Disclosure Considered Non-Voluntary?

A disclosure will not be considered voluntary if the CRA has already initiated an audit, investigation, or enforcement action. In these cases, the taxpayer has lost the chance to apply under the voluntary stream.

That said, prompted disclosures may still qualify if they are triggered by CRA outreach but occur before formal enforcement begins. To be valid, every disclosure must be complete, accurate, and made in good faith.

Penalty Relief: How the Rules Differ

Relief is now directly tied to the timing of disclosure:

  • Unprompted disclosures are eligible for full penalty relief.
  • Prompted disclosures may qualify for partial or reduced relief.
  • No penalty relief is available once a taxpayer is already under formal CRA enforcement.

This system provides transparency while encouraging taxpayers to come forward as early as possible.

Interest Relief: New Percentages for Prompted vs. Unprompted Filers

The new rules establish clear percentages for interest relief:

  • Unprompted applications: Eligible for up to a 50–75% reduction in interest.
  • Prompted applications: Relief is capped at 25%.

This percentage-based model replaces the old split system, making the scope of relief more predictable.

Large Corporations: No More Revenue Thresholds

Under the 2017 program, corporations with more than $250 million in gross revenue were restricted from full relief and often forced into limited tracks.

The 2025 VDP removes these thresholds, meaning corporations of all sizes—including the largest filers—are treated equally. This shift creates a level playing field across small, medium, and large businesses.

Scope of Taxes Covered Under the New VDP

The program’s coverage has expanded considerably. Alongside income tax, GST/HST obligations, source deductions, and excise taxes, the VDP now applies to:

This expansion creates consistent treatment across a broader range of federal tax types.

Waiver of Rights: What Taxpayers Can Now Retain

Previously, applicants had to waive their objection and appeal rights when entering the VDP, leaving them with limited recourse.

The 2025 rules allow taxpayers to retain most rights. They can still dispute tax assessments while disclosing past errors. The only exception is that penalty and interest relief decisions under section 220(3.1) of the Income Tax Act remain non-appealable.

This change makes the program fairer and provides taxpayers with more confidence when coming forward.

Key Implications for Taxpayers

Simpler Classification of Disclosures

By moving from the “General” and “Limited” categories to the clearer Prompted and Unprompted classifications, the CRA has made the program far easier to navigate. Taxpayers no longer need to interpret complex program labels, since relief is now determined simply by whether the disclosure is made before or after CRA contact. This simplification reduces confusion and improves transparency.

Expanded Eligibility for Relief

The Voluntary Disclosure Program Canada 2025 expands eligibility to more taxpayers than ever before. Large corporations, once excluded or pushed into limited categories, can now access the same relief options as smaller businesses. In addition, the broader scope of taxes covered—including income tax and GST/HST, as well as new measures like the Digital Services Tax and Global Minimum Tax—encourages wider participation and ensures consistent treatment across different tax types.

Clearer Interest and Penalty Rules

The introduction of defined percentages for penalty relief and interest relief gives taxpayers certainty. With unprompted applications eligible for the highest level of relief and prompted applications still offering meaningful reductions, taxpayers can now make better-informed decisions about disclosure. The predictability of these percentages removes much of the uncertainty that existed under the old system.

Clearer Interest and Penalty Rules

The introduction of defined percentages for penalty relief and interest relief gives taxpayers certainty. With unprompted applications eligible for the highest level of relief and prompted applications still offering meaningful reductions, taxpayers can now make better-informed decisions about disclosure. The predictability of these percentages removes much of the uncertainty that existed under the old system.

Practical Steps for Filing Under the New Voluntary Disclosure Program

When to Consider an Unprompted vs. Prompted Disclosure

Unprompted disclosures provide maximum relief for undiscovered errors, while prompted disclosures are still worthwhile if CRA has approached but no audit yet. In both cases, timing is key, since applying before an audit or enforcement action begins will always increase the likelihood of relief.

Anchor text suggestions (with targets):

  • maximum relief for undiscovered errors → Voluntary Disclosure Program Canada (2025): Key Changes Explained (this same blog — keeps authority consolidated).
  • still worthwhile if CRA has approached but no audit yet → Tax Audit & CRA Representation Services page.
  • timing is key → T2 Filing Deadline Canada 2025: Avoid CRA Penalties blog.

Documentation and CRA Requirements

Applicants must disclose all errors and omissions, provide supporting records for relevant years, and cover all applicable tax types to be considered under the program.

How to Work with a CPA on Your Application

A CPA can determine whether disclosure is prompted or unprompted, assess expected penalty and interest relief, and guide documentation and manage CRA communications throughout the process.

Conclusion: What the 2025 VDP Means for Canadian Taxpayers

The new framework is more inclusive and predictable, making it easier for individuals and businesses of all sizes to come forward. It encourages proactive disclosure for all taxpayers, promotes greater transparency and fairness than past models, and provides a clear pathway to resolve past non-compliance with the CRA.

If you’re considering a voluntary disclosure, working with a CPA can make all the difference. Our team at TMP can assess your situation, determine the right disclosure type, and manage communications with the CRA to protect your interests.

Contact TMP today for Voluntary Disclosure Program assistance to confidentially review your options and take the first step toward resolving past tax issues.