The CRA has revised several important aspects of its voluntary disclosures program (“VDP”), effective for disclosures filed on or after October 1, 2025.
Unprompted filers
Unprompted filers have received no communication (verbal or written) about an identified compliance issue related to their disclosure. A taxpayer can qualify as an Unprompted filer if the taxpayer has received a so-called education letter from CRA that offers only general guidance and filing information related to a particular topic.
Unprompted filers are eligible for 75 per cent interest relief and 100 per cent penalty relief.
Prompted filers
This new category allows limited relief in cases where a taxpayer has received a communication from CRA about the non-compliance matter, but no audit action or investigation has commenced. This is a welcome and overdue change to the VDP. Many taxpayers are unaware of their non-compliance until they investigate what they believe to be a routine letter from CRA. Only then do they discover their non-compliance.
Prompted filers are eligible for 25 per cent interest relief and “up to” 100 per cent penalty relief. Presumably, CRA decisions will be based, at least in part, on the degree of willful non-compliance demonstrated by the taxpayer.
Relief from prosecution
Relief from prosecution will be granted to both types of filer. CRA states that gross negligence penalties “will not apply” on the information disclosed. This statement seems inconsistent with CRA’s statement that penalties on prompted filers will be waived “up to” 100 per cent. The “up to” relief is perhaps intended to refer only to regular penalties. We assume CRA will provide clarification in the coming weeks as the new program rolls out.
Other changes
Taxpayers may make voluntary disclosures involving the Underused Housing Tax (“UHT”). Previously, CRA had only provided verbal assurance that UHT disclosures could be made. Lack of written assurance left taxpayers with UHT non-compliance issues nervous about using the program.
Supporting documentation (for example, returns, forms, statements, schedules) needed to correct the non-compliance for the most recent six years must be included with the application. If the disclosure involves foreign assets or income, documentation for the most recent 10 years must be included. This does not imply that a valid disclosure only needs to cover the past six (or 10) years.
A completed prescribed form RC199 is now mandatory for all applications. Previously, a taxpayer could include a statement containing comparable RC199 information. CRA has indicated that a simplified RC199 will be released on October 1, 2025.
What has not changed
The requirement for full and complete disclosure has not changed. Taxpayers are required to disclose all non-compliance, including non-compliance that is unrelated to any CRA communication that may have been received. A VDP application may be denied if the CRA learns of other issues of non-compliance that were not included in the original disclosure.
VDP relief is offered only for the past 10 calendar years. This 10-year limit continues to make it challenging to deal with non-compliance that extends beyond the past 10 years.
Taxpayers are expected to remain compliant after being granted relief under the VDP. The CRA may consider a subsequent VDP application from the same taxpayer only if the circumstances are beyond the taxpayer’s control or related to a different matter than a previous application.
Glen MacMillan, Tax Partner
Please contact a member of the Adams + Miles Tax team if you have any questions about CRA’s new voluntary disclosures program or any other matter.
The above content is not complete, does not address all scenarios and is intended for general information purposes only. This memo should not be used or relied on as a substitute for consultation with your Adams + Miles professional advisor.
