Voluntary Disclosures Program (VDP) Canada
Why Use the VDP?
If you’ve made errors in your past tax filings, it’s crucial to correct them before the Canada Revenue Agency (CRA) contacts you. The Voluntary Disclosures Program (VDP) allows taxpayers to rectify past tax mistakes while potentially avoiding penalties, reducing interest charges, and preventing prosecution.
Key Benefits of the VDP
Relief from Late-Filing Penalties
Reduce Interest charges
Protection from Criminal Prosecution
A Structured CRA-Approved Resolution Process
Peace of Mind
What is the Voluntary Disclosures Program?
The Voluntary Disclosures Program (VDP) is an initiative by the CRA that allows individuals, businesses, and other entities to voluntarily disclose past tax mistakes or missed filings. If your disclosure is successful, it can result in relief from certain penalties and interest charges. This opportunity ensures that you can get back on track without the fear of legal consequences, provided that the disclosure meets specific criteria.
Who is Eligible?
The VDP is open to a wide range of taxpayers, including:
Individuals who have unreported income or incorrectly claimed deductions.
Corporations that have failed to disclose earnings, deductions, or foreign assets.
Trusts that have not complied with tax filing and reporting requirements.
Partnerships that need to correct errors in tax filings or information returns.
Other entities, including charities, non-profits, and self-employed individuals.
Conditions for a Valid VDP Application
If the CRA has already initiated an audit or enforcement action, you may no longer be eligible for the VDP.
To qualify for relief, the disclosure must meet the following conditions:
Voluntary Submission
The CRA must not have contacted you about the issue before submission.
Complete Disclosure
All relevant years and tax issues must be fully disclosed.
Penalty Involvement
The error must typically result in a penalty.
At Least One Year Overdue
The tax return in question must be at least one year overdue.
Payment Included
Submit payment for estimated taxes owed or request a payment arrangement.
When Should You Apply for the VDP?
The sooner you submit your VDP application, the better. Applying early increases your chances of approval and ensures that you avoid costly penalties or legal issues. It is important to take action as soon as you identify errors in your past tax filings.
How Does the VDP Process Work?
Once you submit your application to the CRA, the process typically unfolds as follows:
Submission of Documentation
You provide the necessary documents, including tax returns, financial records, and proof of tax payments.
Effective Date of Disclosure (EDD)
CRA Official Review
Approval/Denial
How Long Does the VDP Process Take?
- The processing time varies based on the complexity of the case. Generally, most cases take several months. More complex cases or those requiring additional documentation may take longer. The CRA assesses each application on a case-by-case basis.
What Happens if My VDP Application is Denied?
- If your VDP application is denied, you may be subject to penalties, interest, and potential prosecution. However, if the CRA rejects your application, we can help explore alternative solutions, such as appealing the decision or negotiating a resolution.
TMP guided me through the VDP process seamlessly—saving me thousands in penalties. 
John D., Business Owner
At TMP, we’ve successfully helped over 100 clients resolve tax issues through the VDP program, ensuring compliance while minimizing financial exposure. With 95% approval rate of application and penalty relief.
Why Choose TMP for Your VDP Submission?
Educating Clients
We prioritize educating our clients, empowering them with the knowledge to make informed financial decisions.
Seasoned Experts
Our team brings years of experience, providing reliable and comprehensive tax solutions.
Personalized Solutions
We tailor our services to your unique circumstances to address specific goals and challenges.
Modern Approach
By utilizing cutting-edge technologies and innovative methods, we ensure our services meet the demands of today’s tax landscape.
Frequently Asked Questions (FAQs)
Find answers to common questions about Democracy
- Unreported Income: Employment, investments, or offshore assets.
- Incorrect Tax Deductions: Ineligible claims for deductions or credits.
- Failure to File Returns: T1 personal, T2 corporate, T1135, T1134, GST/HST, payroll, etc.
- Non-Compliance with Sales Tax: Issues with GST/HST, payroll, or other sales tax.
- Unreported Foreign Assets: Missing or incorrect filings of foreign assets (T1135 or T1134 forms).
Once submitted, the CRA will:
- Review your application to ensure it meets the VDP’s requirements.
- Request additional information if needed.
- Notify you in writing whether your disclosure is accepted or rejected.
Yes, the CRA provides a Pre-Disclosure Discussion Service, which allows you to discuss your situation anonymously. This non-binding service can provide valuable insight into the VDP process and help you understand potential relief available.
While the VDP itself does not have a cost, there may be fees associated with hiring a tax professional to help you prepare and submit your disclosure. At TMP, we offer customized packages based on the complexity of your case (e.g., individual, corporate, or international tax errors).
If you discover additional errors after submitting your VDP application, you can submit an amended disclosure. However, it is important to notify the CRA as soon as possible to ensure your compliance and avoid complications.
Yes, the VDP can be used to disclose unreported foreign income, including offshore accounts or assets. You can avoid significant penalties and interest by voluntarily correcting these errors before the CRA contacts you.
The CRA reviews VDP applications on a case-by-case basis and evaluates whether:
- The disclosure is voluntary.
- The disclosure is complete and covers all relevant tax years and issues.
- The disclosure involves penalties or interest.
- The tax return is at least one year overdue.
However, in some cases, the CRA may provide partial relief, especially if there are circumstances surrounding the error that may require further review.
To begin the VDP process, submit:
- Form RC199 (VDP application form)
- A cover letter explaining your disclosure.
- Supporting documents such as tax returns, financial records, and proof of tax payments.
You can submit your VDP application through the CRA Portal or by mail.
While there is no official deadline, it is crucial to apply before the CRA initiates any audit or enforcement action. Early submission increases your chances of a successful outcome.
Generally, the CRA expects taxpayers to remain compliant after using the VDP and may not accept subsequent applications for the same issues. However, in exceptional cases, the CRA may consider a second application.
Failing to voluntarily disclose past tax errors can lead to severe consequences, including:
- Penalties and Interest: The CRA may impose substantial penalties and interest on outstanding taxes.
- Criminal Prosecution: If the CRA finds evidence of deliberate tax evasion, you could face criminal charges.
Audits: The CRA may initiate audits and investigations, which could complicate your tax matters further.
Yes, a qualified tax professional or accountant can submit the VDP application on your behalf, ensuring all necessary documents are included, and your submission is complete. It’s recommended to work with an expert for the best chance of success.
Yes, the CRA’s VDP includes errors related to cryptocurrency transactions. If you’ve failed to report cryptocurrency income or gains, you can submit a disclosure under the program to avoid penalties and potential prosecution.
Some common reasons the CRA may reject a VDP application include:
- Non-Voluntary Disclosure: If the CRA had already contacted you about the issue.
- Incomplete Disclosure: Failing to provide full and accurate details about the issue or the relevant years.
Ineligibility for Relief: If the issue does not meet the requirements for penalty or interest relief.
Our VDP Filing Services
We offer tailored VDP filing services to ensure that your tax filings are corrected and compliant, minimizing penalties and interest. Below are our service packages based on the complexity of your case.
Basic
Who It’s For:
Individuals with simple omissions (e.g., unreported income or missed foreign asset filings)
- – VDP Filing: Filing for one individual’s omission of income from Canada or missed foreign assets (e.g., T1135 form).
- – Simple Cases: For cases where no taxes are owed or minimal taxes are due.
Expert
Who It’s For:
Corporations or more complex individual cases
- – VDP Filing: Filing for one corporation’s omission of income or missed foreign asset filings.
- – Crypto or International Income Disclosures: Includes filing for cryptocurrency income, foreign income, and international reporting.
- – T1135 Filings: Preparation and filing for T1135 or similar forms for foreign asset reporting.
Premium
Who It’s For:
Complex VDP cases (multiple properties, trusts, corporations)
- – VDP Filing: Filing for multiple properties or complex cases, including GST/HST disclosures, business tax filings, and international reporting.
- – Multiple Years/Complex Tax Situations: Handling multiple years of tax errors or filings involving trusts or corporations.
Custom
Who It’s For:
Tailored solutions for unique cases or larger portfolios
- – Custom Consultation: Fill in this questionnaire and we’ll get back to you with a personalized quote.