Effective October 1, 2025, the Canada Revenue Agency overhauled the Voluntary Disclosures Program in the most significant reform in years. The General Program and Limited Program have been replaced. The voluntariness test has been broadened. The program’s scope now covers additional statutes. The $250 million corporate threshold has been eliminated. And the amended return requirement has been reduced. This guide explains what changed, what it means for Ontario taxpayers and their advisors, and why retaining a Canadian tax lawyer before any CRA contact remains essential.

Update — October 2025: This article has been substantially updated to reflect the CRA’s October 1, 2025 VDP overhaul, including the new general-relief and partial-relief tiers, the broadened voluntariness test, the Effective Date of Disclosure framework, the expanded scope, the $250 million corporate threshold elimination, the egregious non-compliance exclusion, third-party data triggers, and the updated amended return requirements.

What Is the Voluntary Disclosures Program?

The Canada Revenue Agency’s (CRA) Voluntary Disclosures Program (VDP) allows taxpayers to come forward voluntarily to correct inaccurate tax filings, report previously unreported income, disclose omitted information, or file overdue tax returns before the CRA initiates enforcement action. When a disclosure qualifies under the program, taxpayers will generally be required to pay the taxes owing and applicable interest, but they may receive relief from civil penalties and avoid criminal prosecution.

The VDP is intended to encourage voluntary tax compliance by giving individuals, corporations, trusts, and certain other taxpayers an opportunity to correct past tax errors before the CRA discovers them through an audit, review, or investigation.

Common disclosures involve unreported business or investment income, unfiled tax returns, GST/HST reporting errors, payroll tax issues, offshore assets, and foreign income.

New VDP Rules: What Changed in October 2025?

Effective October 1, 2025, the CRA overhauled the VDP in the most significant reform of the program in years. The General Program and Limited Program have been replaced by a general-relief tier and a partial-relief tier. The voluntariness test has been significantly broadened.

The program’s scope has been expanded to cover additional statutes.  The $250 million corporate gross revenue threshold has been eliminated. And the amended return requirement has been reduced to six years for most applications.

“The October 2025 VDP overhaul creates both new opportunities and new risks for Ontario taxpayers. The partial-relief tier opens a formal pathway for taxpayers who were previously shut out of the VDP because of prior CRA contact. But the new prompted/unprompted distinction also means that a mistake in characterizing the nature of prior CRA communications can cost a taxpayer 50 percentage points of interest relief. Getting that analysis right requires legal expertise — and the protection of solicitor-client privilege to do it safely.” 

— David J. Rotfleisch, Certified Specialist in Taxation (Law Society of Ontario)

Here are some helpful resources regarding this update:

• A comprehensive analysis of all aspects of the October 2025 overhaul: CRA Overhauls the Voluntary Disclosures Program (VDP).
• A full history of the 2018 changes and the October 2025 overhaul: 2018 changes to the Voluntary Disclosure Program.

Who Can Apply for the Voluntary Disclosures Program?

Most taxpayers and registrants — individuals, corporations, trusts, employers, and partnerships — can apply for the VDP.

The program covers both income tax non-compliance and, following the October 2025 expansion, non-compliance under:

• The Select Luxury Items Tax Act
• The Excise Tax Act
• The Digital Services Tax Act
• The Global Minimum Tax Act
• The Air Travellers Security Charge Act
• The Softwood Lumber Products Export Charge Act
• The Underused Housing Tax Act

Common situations where the VDP applies include unfiled tax returns for prior years, unreported or under-reported income, incorrect expense claims, unremitted employee source deductions, unreported foreign assets (Form T1135) or foreign income, unfiled or incorrect GST/HST returns (see the firm’s GST/HST practice), unreported cryptocurrency income (see the firm’s Canadian cryptocurrency tax practice), and unremitted luxury tax on subject vehicle transactions or failure to register as a luxury vehicle vendor.

Core Eligibility Conditions: The Five Requirements

To qualify for VDP relief under the post-October 2025 rules, a disclosure must satisfy five conditions. Each is a hard requirement.

• Voluntary: Filed before an audit or investigation has been initiated against the taxpayer or a related taxpayer in respect of the information being disclosed. Under IC00-1R7, this test has been significantly broadened (see below).
• Complete: All known errors and omissions must be disclosed. Partial or selective disclosure risks rejection of the entire application, not merely exposure on the omitted material.
• Penalty at issue: The non-compliance must involve a potential penalty.
• One-year limitation: The disclosure must relate to a period at least one year past its due date.
• Payment: The taxpayer must include payment of the tax owing or a payment arrangement approved by the CRA.

The New Relief Tiers: General Relief and Partial Relief

General Relief — Unprompted Disclosures

General relief is the highest tier, available when the CRA has not yet issued any compliance communication about the specific issue being disclosed. Taxpayers in this category receive 100% penalty relief and 75% interest relief, plus protection from criminal prosecution. This is more favourable than the former General Program, which provided only 50% interest relief.

Partial Relief — Prompted Disclosures

Partial relief applies when the taxpayer has already received CRA compliance communication identifying the specific issue. This tier provides up to 100% penalty relief and 25% interest relief, plus criminal prosecution protection. Under the pre-October 2025 regime, a taxpayer in this situation was typically disqualified from the program entirely.

Comparison Table

VDP Decision Pathway: At a Glance

The following infographic illustrates the three possible outcomes depending on the stage at which a taxpayer seeks to correct prior non-compliance. The completeness condition and the look-back period requirements apply equally to all three tiers.

Figure 1: VDP Decision Pathway — Updated for IC00-1R7 (October 2025). Three possible outcomes depending on the stage of CRA contact. The completeness condition applies to all tiers. Produced by Rotfleisch & Samulovitch P.C.

The Broadened Voluntariness Test: The Most Significant Operational Change

Under IC00-1R7, the CRA has significantly broadened the circumstances that qualify a disclosure as voluntary. Under the prior regime, a simple CRA Request to File missing returns, or even awareness of a pending enforcement action, could disqualify an application. Under IC00-1R7, an application will generally only be considered not voluntary if an audit or investigation has actually been initiated against the taxpayer or a related taxpayer in respect of the specific information being disclosed.

This is the most operationally significant change of the October 2025 overhaul. Ontario taxpayers who have received general CRA education letters, general compliance nudges, or even Requests to File on unrelated matters may still qualify for full general relief on the disclosed issue. The critical question is whether the CRA contact was specific to the non-compliance being disclosed, or general in nature. That analytical question must be answered with a knowledgeable Canadian tax lawyer before the application is structured.

A disclosure will generally be disqualified if: an audit or investigation has been initiated by the CRA, a law enforcement agency, a securities commission, or another federally or provincially regulated authority against the taxpayer or a related taxpayer in respect of the disclosed information; or third-party information identifying the specific non-compliance has already been received by the CRA.

Third-Party Data Sources: A Growing Trigger for Prompted Status

One of the most practically significant aspects of the prompted-application definition in IC00-1R7 is its extension to cases where the CRA has already received information from third-party sources regarding the potential involvement of a specific taxpayer in tax non-compliance. This captures a wide and rapidly expanding category of situations that Ontario taxpayers with offshore accounts, cryptocurrency holdings, or luxury vehicle transactions may not be aware of.

The CRA now receives substantial volumes of taxpayer-specific data through multiple channels. Under the Common Reporting Standard and bilateral tax information exchange agreements, the CRA regularly receives account information from foreign financial institutions about Canadian residents with offshore accounts — meaning an Ontario taxpayer with unreported foreign income or unfiled Form T1135 foreign asset disclosure obligations may already be in the CRA’s data before ever making contact with the agency. The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) reports suspicious transaction information to the CRA. The Canada Border Services Agency shares importation data, making luxury vehicle cross-border acquisition strategies particularly vulnerable to prompted-application classification. And the CRA has increasingly obtained data from cryptocurrency exchange platforms operating in Canada.

The practical implication for Ontario taxpayers is that the absence of a CRA letter does not mean their non-compliance is unknown to the agency. A taxpayer who waits to receive a letter before filing a VDP application risks finding that the letter has already converted their potential unprompted application into a prompted one, at a cost of 50 percentage points of interest relief.

The Effective Date of Disclosure: A Critical Concept for Ontario Taxpayers

One of the most practically important concepts in any VDP application is the Effective Date of Disclosure (EDD). Once a VDP application is received by the CRA, the CRA issues an EDD letter confirming the date of receipt. From the EDD forward, any CRA compliance action initiated by another department or unit that is unaware of the disclosure — an audit referral, a collections action, or a third-party information match — will not invalidate the application.

Critical Point: The EDD Is Only as Protective as the Disclosure Is Complete

A taxpayer who discloses five years of unreported income but omits a sixth year is not only exposed on the omitted year — the failure to disclose known non-compliance means the completeness condition has not been satisfied, which puts the entire VDP application at risk of rejection. If the CRA discovers the omitted year during its review, it may treat the application as incomplete and decline to grant relief on any of the disclosed years. A knowledgeable Canadian tax lawyer ensures that the completeness condition is fully satisfied before the EDD clock starts.

Pre-Disclosure Discussions: The Anonymous Preliminary Pathway

The CRA offers a pre-disclosure discussion service that allows taxpayers or their representatives to discuss their situation with the CRA on a no-name, anonymous basis before committing to a formal VDP application. These preliminary discussions are exploratory only and do not establish an Effective Date of Disclosure. Retaining a knowledgeable Canadian tax lawyer to conduct pre-disclosure discussions on the taxpayer’s behalf is strongly advisable: solicitor-client privilege attaches only where a lawyer has been retained, and statements made without counsel may inadvertently cause a general relief application to be reclassified as prompted.

Egregious and Intentional Non-Compliance: The Hard Exclusion Under IC00-1R7

The October 2025 overhaul preserved and formalized one hard exclusion: taxpayers whose non-compliance is found to be egregious or intentional will be denied VDP relief entirely, regardless of whether the disclosure is otherwise technically complete and voluntary. Under the prior regime, intentional non-compliance was addressed through the Limited Program, which provided gross negligence penalty relief but no interest relief. Under IC00-1R7, intentional or egregious non-compliance removes a taxpayer from the program entirely. There is no longer a Limited Program safety valve.

Categories of conduct most likely to attract the egregious or intentional characterization include deliberate suppression of income over multiple years, use of nominees or offshore structures to conceal assets, false or misleading statements made to the CRA in prior audits, and participation in abusive tax shelters subject to known CRA enforcement. The distinction between inadvertent error, gross negligence, wilful blindness, and intentional evasion is a legal question that must be analyzed under solicitor-client privilege before any VDP application is filed. Ontario taxpayers face combined federal-Ontario gross negligence penalty exposure under both the Income Tax Act and the Taxation Act, 2007, making the stakes of an egregious-conduct determination higher than in most provinces.

“Egregious non-compliance is not a label the CRA should apply lightly — and the courts have confirmed they will not sustain a mechanical application of the concept without genuine individualized assessment. In the firm’s experience, many Ontario taxpayers whose situations appear serious on the surface — large amounts, multiple years, offshore elements — still have strong arguments for VDP eligibility when the full facts are properly assessed under privilege before any application is filed.” — David J. Rotfleisch, Certified Specialist in Taxation (Law Society of Ontario)

Critical Warning: Filing a VDP application is an act of disclosure. If the CRA denies the application on the grounds of egregious or intentional non-compliance, the information provided in the application remains with the CRA and can be used in any subsequent audit or prosecution. The decision to file must be made only after a thorough legal assessment under solicitor-client privilege of both the likely characterization of the conduct and the prosecution risk if relief is denied.

Procedural Changes: RC199, Return Requirements, and the $250 Million Threshold Eliminated

The Document Requirement: Six Years, Four Years, and Ten Years

Under the post-October 2025 rules, taxpayers must disclose all known non-compliance but need only submit amended returns for a specified look-back period. For Canadian-sourced income or assets, the most recent six years. For foreign-sourced income or assets, the most recent ten years. For GST/HST-related non-compliance, the most recent four reporting periods. The prior obligation to file amended returns for every affected year regardless of age has been eliminated.

The $250 Million Corporate Threshold: Eliminated

Under the pre-October 2025 rules, any corporation with gross revenue exceeding $250 million was automatically assigned to the Limited Program regardless of the nature of its non-compliance. IC00-1R7 has eliminated this threshold. Large corporations are now assessed on the same prompted/unprompted basis as all other applicants.

Subsequent Applications: The Single-Condition Test

IC00-1R7 relaxed the second-application condition from requiring both — circumstances beyond the taxpayer’s control, and a different matter — to requiring only one of the two. A subsequent application may now be considered where the circumstances are beyond the taxpayer’s control or the application relates to a different matter. Importantly, voluntariness under IC00-1R7 is assessed on an issue-specific basis: a taxpayer under audit on one issue may still file a valid disclosure on a separate, unrelated matter.

The VDP Application Process: Form RC199

Applications to the CRA’s Voluntary Disclosures Program are generally made using Form RC199, Voluntary Disclosures Program Application. Effective October 1, 2025, the CRA introduced a simplified version of Form RC199 as part of its broader overhaul of the VDP. Although the application process has been streamlined, taxpayers must still submit a complete disclosure that satisfies the program’s eligibility requirements.

Step 1: Complete Form RC199

The taxpayer prepares and submits Form RC199 together with all supporting information relating to the tax non-compliance. The application should include sufficient detail for the CRA to assess whether the disclosure qualifies under the Voluntary Disclosures Program.

Step 2: Submit Your VDP Application

The completed application is submitted to the CRA. Where applicable, taxpayers should include payment of the estimated taxes owing or make satisfactory payment arrangements with the CRA as part of the application process.

Step 3: CRA Reviews the Application

After receiving the application, the CRA reviews the disclosure to determine whether it meets the VDP’s eligibility requirements. During this stage, the CRA may request additional information or supporting documentation before making its decision.

Step 4: CRA Issues Its Decision

Once the review is complete, the CRA provides a written decision confirming whether the application has been accepted and, if so, whether relief will be granted under the Prompted or Unprompted disclosure stream. The CRA will also outline any conditions the taxpayer must satisfy.

Step 5: Request a Second Review or Judicial Review

If the taxpayer disagrees with the CRA’s determination, they may request a second administrative review. Where appropriate, a taxpayer may also seek judicial review in the Federal Court if the CRA unreasonably or unfairly denies a properly filed voluntary disclosure application.

Key Cases: Milgram Foundation, Gauthier, and the Completeness Standard

Milgram Foundation v. Canada (Attorney-General), 2024 FC 1405

Milgram Foundation is the most significant recent Federal Court decision on VDP-related conduct. The CRA accepted a VDP application in 2015, conducted a second audit in 2016 and found no errors, then reversed course in 2018 and proposed to reassess earlier years on the basis of alleged misrepresentations. The Federal Court found the CRA’s conduct to be egregiously unfair and an abuse of process, relying on affidavit evidence from eight experienced tax lawyers who had never seen the CRA re-open accepted disclosures in this manner.

Milgram Foundation confirms two propositions relevant to any Ontario taxpayer contemplating a VDP application. First, the Federal Court will intervene where the CRA acts in bad faith in connection with an accepted disclosure. Second, a disclosure that is genuinely complete forecloses the CRA’s ability to go further back in time on the same issues. The judicial review standard was established in Lanno v. Canada (Customs and Revenue Agency), 2005 FCA 153, 2005 DTC 5245, which confirmed that VDP decisions are reviewable on a reasonableness standard. Stemijon Investments Ltd. v. Canada (Attorney General), 2011 FCA 299, further confirmed that a mechanically applied VDP denial without genuine individualized consideration is per se unreasonable.

Appeal Pending: The CRA appealed the Federal Court’s decision to the Federal Court of Appeal (Court File No. A-323-24). The FCA heard the appeal on December 1–2, 2025, and the decision was reserved as of the date of this article.

Gauthier v. Canada (National Revenue), 2017 FC 1173: The Incomplete Disclosure Risk

In contrast to Milgram Foundation, Gauthier v. Canada (National Revenue), 2017 FC 1173, illustrates the risk where a disclosure does not cover the full period of non-compliance. The taxpayer had an undisclosed Bahamian bank account dating back to 1978 and made a VDP application covering only 2005–2014. After acceptance, the CRA commenced an audit of the 1980–2004 taxation years. The taxpayer sought judicial review and an injunction, both of which were denied. The taxpayer subsequently discontinued the judicial review proceeding entirely.

Gauthier and Milgram Foundation together define the completeness standard from both sides. Gauthier illustrates that VDP protection extends only to the non-compliance actually disclosed. Milgram Foundation addresses the limits on CRA conduct after an accepted complete disclosure. For Ontario taxpayers with non-compliance predating the 6- or 10-year look-back period, the practical lesson of Gauthier remains fully operative: taxes are payable and the CRA may audit those earlier years even after a VDP application is accepted.

Expanded Scope: The Select Luxury Items Tax Act and Other Statutes

The October 2025 overhaul formally extended the VDP to cover non-compliance under the Select Luxury Items Tax Act (SLITA), the Digital Services Tax Act, the Global Minimum Tax Act, the Air Travellers Security Charge Act, the Softwood Lumber Products Export Charge Act, and the Underused Housing Tax Act. Luxury vehicle vendors who failed to register under the SLITA, failed to remit luxury tax on subject vehicle transactions, or incorrectly issued exemption certificates can now file a VDP application to seek penalty and interest relief. For a full explanation of the underlying luxury tax rules, see the firm’s guide to the luxury tax.

The CRA has significant data-matching capacity through vehicle registration records, title transfer data, and CBSA importation records. Ontario vendors who have transacted in subject vehicles above the $100,000 threshold without registering under the SLITA are at meaningful risk of identification. The window for an unprompted voluntary disclosure closes permanently the moment the CRA initiates any compliance contact regarding the SLITA non-compliance.

Case Studies: VDP Applications in Practice

Unreported Criminal Income: Oakville

Our Ontario tax law firm was contacted by John from Oakville, who had been charged with commercial fraud and had not reported the income from that fraud. We advised him that income from criminal activities is fully taxable and that the police routinely report this type of activity to the CRA. Our experienced Canadian tax lawyers submitted a voluntary disclosure for the unreported income, and he was able to avoid prosecution for tax evasion and incurred no penalties.

Unreported Swiss Bank Accounts: Montreal Estate

Jeanne from Toronto approached our Canadian tax law firm on behalf of her mother, who resided in Montreal. Her mother had inherited two Swiss bank accounts on the death of her husband. The accounts had not been reported to the CRA. Our Toronto tax lawyers submitted no-names voluntary disclosures on behalf of the estate and her mother for unreported offshore income and unfiled T1135 offshore asset forms. We persuaded the CRA to limit the disclosure to the past ten years. No penalties were charged and the rate of interest on unreported income was reduced.

Unreported Offshore Oil Patch Income: Manitoba

Robert is based in Manitoba but works overseas in the oil patch. His employer pays his foreign taxes, but his Canadian accountant did not properly report all of his foreign income due to the tax payments. Our tax lawyers submitted an application on his behalf and worked with his accountants to file amended Canadian income tax returns. He avoided all penalties on the unreported offshore income and was charged a reduced rate of interest on the taxes owed.

CRA Audit Risk and the Importance of Acting Before CRA Contact

The VDP’s most important planning principle is unchanged by the October 2025 overhaul: the best available relief — general relief, with 100% penalty relief and 75% interest relief — requires that the disclosure be unprompted. The moment the CRA issues compliance communication identifying a specific issue, the maximum available interest relief drops from 75% to 25%.

For Ontario taxpayers with luxury tax non-compliance, offshore accounts, or unreported cryptocurrency income, the CRA’s increasing use of third-party data sources means that the window for an unprompted disclosure can close without warning. For guidance on surviving a CRA tax audit once it has started, the firm’s dedicated guide addresses the full process and taxpayer rights.

Why a Knowledgeable Canadian Tax Lawyer Is Essential for a VDP Application

Solicitor-client privilege protects communications between a taxpayer and a Canadian tax lawyer. No equivalent privilege exists for accountants: the CRA can compel an accountant to disclose communications and records relating to a client’s tax affairs. In the VDP context, a complete assessment of all non-compliance must be conducted before the application is filed. The protection of privilege is the foundation of a safe and effective disclosure strategy.

A Canadian tax lawyer can analyze the nature of any prior CRA communications to determine whether the disclosure qualifies for general relief or only partial relief. The lawyer can structure the application to satisfy the completeness requirement, assess whether the egregious non-compliance exclusion applies, and prepare a Federal Court judicial review application if the CRA unfairly denies a properly filed disclosure. Where gross negligence penalties are at issue, see the firm’s analysis of gross negligence penalties in Canadian tax law.

Rotfleisch & Samulovitch P.C. has been filing voluntary disclosure applications since before the program was widely known, and has submitted thousands of disclosures over more than three decades. David J. Rotfleisch is a Certified Specialist in Taxation (Law Society of Ontario).

For more information, see the firm’s voluntary disclosure practice, the taxpage.com VDP resource centre, and the firm’s tax evasion and voluntary disclosure primer.

“A voluntary disclosure application is the starting point of a legal process, not the end of one. How the application is structured — what is disclosed, how prior CRA communications are characterized, and whether the completeness condition is satisfied — determines not only whether relief is granted but also whether the taxpayer is protected if the CRA later attempts to go further than the disclosed material. As Milgram Foundation illustrates, a well-constructed disclosure that satisfies the completeness condition preserves every ground of challenge on judicial review, while a poorly structured one may foreclose arguments that would otherwise have been available. Getting this right requires experienced legal judgment, not just administrative filing.”

— David J. Rotfleisch, Certified Specialist in Taxation (Law Society of Ontario)

Pro Tax Tips: Maximizing Your VDP Relief as an Ontario Taxpayer

1. The single most important step for any Ontario taxpayer considering a VDP application is to retain a Canadian tax lawyer before any contact with the CRA. The protection of solicitor-client privilege must be established before the assessment of all non-compliance begins. Any communication with the CRA before retaining legal counsel — including calling the CRA’s general enquiry line or participating in a pre-disclosure discussion without counsel — risks compromising the privilege protection and potentially converting an unprompted disclosure into a prompted one.
2. Taxpayers should resist the temptation to file amended returns directly to the CRA as a self-managed alternative to a VDP application. Filing amended returns outside the VDP forfeits all penalty relief and all interest relief. Once the application is filed, the Effective Date of Disclosure is established — but that protection only extends to the non-compliance that was fully and completely disclosed. Ontario taxpayers with both federal and provincial tax exposure across multiple years should ensure that the disclosure captures both dimensions of liability.

Where VDP eligibility is uncertain, the taxpayer relief provisions under subsection 220(3.1) of the Income Tax Act or a remission order under section 23 of the Financial Administration Act may provide parallel relief pathways. See the firm’s overview of tax remission orders for guidance on those alternatives.

FAQs: Voluntary Disclosure Program Ontario (Updated for October 2025)

What changed in the VDP on October 1, 2025?

The General Program and Limited Program were replaced with a general-relief tier (100% penalty relief, 75% interest relief, for unprompted disclosures) and a partial-relief tier (up to 100% penalty relief, 25% interest relief, for prompted disclosures). The voluntariness test was broadened. The $250 million corporate threshold was eliminated.

The program was expanded to cover the Select Luxury Items Tax Act, Digital Services Tax Act, Global Minimum Tax Act, and other statutes. The amended return requirement was reduced to 6 years for Canadian matters, 4 years for GST/HST, and 10 years for offshore.

What is the broadened voluntariness test under IC00-1R7?

Under IC00-1R7, a disclosure is only considered not voluntary if an audit or investigation has been initiated against the taxpayer or a related taxpayer in respect of the specific information being disclosed. General education letters, Requests to File on unrelated matters, and other non-specific CRA contact do not disqualify a disclosure from general relief.

What is the Effective Date of Disclosure?

The Effective Date of Disclosure (EDD) is the date the CRA receives the VDP application. From the EDD, any CRA compliance action from another department on the disclosed non-compliance will not invalidate the application. The EDD is only as protective as the disclosure is complete: a material omission risks rejection of the entire application.

Can I apply for the VDP if the CRA has already started an audit?

No, where an audit or investigation has been initiated against the taxpayer in respect of the information being disclosed, the application is not voluntary under IC00-1R7 and is ineligible for the VDP entirely. However, voluntariness is assessed on an issue-specific basis: an Ontario taxpayer under audit on one issue may still file a valid disclosure on a separate, unrelated matter.

Could third-party data received by the CRA make my application a prompted one?

Yes. IC00-1R7 expressly provides that an application is prompted where the CRA has already received information from third-party sources about the specific taxpayer’s potential non-compliance. This includes data from foreign financial institutions under the Common Reporting Standard, from FINTRAC, from cryptocurrency exchanges, and from the CBSA. Ontario taxpayers with offshore accounts, unreported crypto income, or luxury vehicle transactions should not assume the absence of a CRA letter means their non-compliance is unknown.

What is egregious non-compliance and why does it matter?

IC00-1R7 excludes taxpayers whose non-compliance is egregious or intentional from VDP relief entirely. There is no longer a Limited Program safety valve. A denied application leaves the disclosed information with the CRA. A knowledgeable Canadian tax lawyer should assess the conduct before any application is filed. See the case law under Zsoldos v. Canada (Attorney General), 2004 FCA 338, Wynter v. Canada, 2017 FCA 195, and Guindon v. Canada, 2015 SCC 41.

Was the $250 million corporate threshold eliminated?

Yes. IC00-1R7 eliminated the threshold that automatically assigned corporations with gross revenue above $250 million to the Limited Program. Large corporations are now assessed on the same prompted/unprompted basis as all other applicants.

How many years of returns must be submitted?

For Canadian-sourced income or assets: the most recent six years. For foreign-sourced income or assets: the most recent ten years. For GST/HST non-compliance: the most recent four reporting periods. Taxpayers must still disclose all known non-compliance across all years.

Does the VDP apply to GST/HST non-compliance?

Yes. GST/HST non-compliance is covered under the Excise Tax Act, with the most recent four reporting periods required. A special wash transaction category provides 100% penalty and interest relief where the non-compliance had no net tax effect.

What is an offshore voluntary disclosure?

An offshore voluntary disclosure involves correcting non-compliance related to foreign assets or income — including unreported foreign bank accounts, foreign corporations, and offshore investments. The T1135 Foreign Income Verification Statement must be filed where foreign property exceeds $100,000 Canadian. For offshore disclosures, the amended return requirement extends to the last ten years.

Does the VDP now cover the luxury tax?

Yes. As of October 1, 2025, the VDP formally covers non-compliance under the Select Luxury Items Tax Act.

What happened in the Milgram Foundation and Gauthier cases?

In Milgram Foundation v. Canada (Attorney-General), 2024 FC 1405, the Federal Court quashed the CRA’s decision to re-open years predating an accepted VDP disclosure. The CRA has appealed (A-323-24); the FCA heard the appeal December 1–2, 2025, decision reserved. In Gauthier v. Canada (National Revenue), 2017 FC 1173, the CRA audited years predating a VDP application that covered only part of the taxpayer’s non-compliance. Together the cases define the completeness standard: a complete disclosure provides maximum protection; an incomplete one leaves earlier years exposed.

What happens if the CRA denies my VDP application?

The taxpayer may request a second administrative review. If also denied, a Federal Court judicial review application is available. The reasonableness standard from Lanno, 2005 FCA 153, governs the review. Stemijon, 2011 FCA 299, confirms that mechanical denial without individualized consideration is per se unreasonable.

What if I do not qualify for the VDP?

The taxpayer relief provisions under subsection 220(3.1) of the Income Tax Act and a remission order under section 23 of the Financial Administration Act are the two primary alternative relief mechanisms.

For a FREE 10-minute consultation with a student (Canada only), contact Rotfleisch & Samulovitch P.C. at taxpage.com.

Disclaimer: This article provides broad information. It is only accurate as of the posting date. It has not been updated and may be out of date. It does not give legal advice and should not be relied on as tax advice. Every tax scenario is unique to its circumstances and will differ from the instances described in the article. If you have specific legal questions, you should seek the advice of a Canadian tax lawyer.