The Canada Revenue Agency will overhaul its Voluntary Disclosures Program on Oct. 1, widening access and standardizing relief to coax more taxpayers to clean up past errors.
The shift, set out this week in new guidance and policy documents, marks the most significant rewrite since 2018 and is meant to make the program easier to understand and use.
At the center of the update is a new two-track relief structure that distinguishes between unprompted and prompted applications.
Unprompted filers, who have not been contacted by the agency about a specific issue, will be eligible for 75 percent interest relief and full penalty relief.
Prompted filers, who apply after receiving a compliance communication, can receive 25 percent interest relief and up to full penalty relief. In both cases, successful applicants avoid referral for criminal prosecution on the disclosed issues.
The CRA is also broadening who can apply, Taxpayers who received general educational letters, such as reminders about unreported income or ineligible expenses, can now seek relief under the program.
Those already under audit or investigation, or those deemed egregiously noncompliant, remain outside the fence. The agency says the goal is fairness, not rewarding noncompliance, while nudging people to fix old mistakes before they escalate.
A revamped Form RC199 goes live Oct. 1, along with plain-language policy written to minimize jargon. The CRA frames the changes as part of a broader push to move from paper to electronic processes that speed reviews and improve clarity for individuals, businesses, and their representatives.
For cases that span multiple years, the CRA has clarified what to submit. Applications involving foreign-sourced income or assets should include the most recent 10 years; those tied to Canadian-sourced income or assets should include six years; and GST/HST issues should include four years.
Periods with no errors do not need to be filed, though the agency can still request additional records. That guidance aims to curb overfiling while ensuring officers have enough history to evaluate claims.
The new rules arrive through Information Circular IC00-1R7 and a companion GST/HST Memorandum 16-5-1, both of which apply to applications the CRA receives on or after Oct. 1.
Files submitted before that date will continue under the prior circular, IC00-1R6, and the earlier GST/HST memorandum.
The staggered start gives taxpayers and advisers a short runway to decide whether to file now or wait for the richer, more predictable relief structure.
Beyond income tax, the circular confirms the program’s reach across multiple regimes, including GST/HST, excise duties and taxes, the underused housing tax, the luxury tax, the digital services tax, and the Global Minimum Tax Act.
That breadth matters for cross-border investors and multinational groups with Canadian touchpoints, since one coherent process can now address compliance gaps across a wider slate of obligations. Any taxes owing still must be paid in full.
The CRA also kept an important safety valve: taxpayers can still request an anonymous pre-disclosure discussion with a CRA official to understand the risks of staying noncompliant and the relief they might expect.
Those talks are informal and nonbinding, but they help filers gauge whether their facts line up with the program’s requirements before they submit a full application.
The practical takeaway is twofold: First, the relief math is clearer and potentially more generous, especially for those who step forward before any targeted compliance contact. Second, the eligibility door is open a little wider for people who got generic educational letters.
If you are weighing a disclosure that involves foreign assets or digital activity, or you operate a business with GST/HST exposure, the new framework may reduce the interest bite and eliminate penalties if you qualify.
What is changing on Oct. 1
The CRA will judge whether an application is unprompted or prompted based on communications already sent to the taxpayer.
It will then apply the corresponding interest and penalty relief, and will not refer successful disclosures for criminal prosecution.
Applications must be complete, include all relevant years within the specified windows, and either include payment or a request for a payment arrangement for estimated tax owing.
If the CRA declines relief, taxpayers can seek a second administrative review, and in some cases pursue judicial review in Federal Court.
