CRA Voluntary Disclosures Program Changes in 2025
What Business Owners Must Do Before the Window Narrows
Discovering a past tax error is uncomfortable.
Ignoring it is expensive.
With major changes to the CRA’s Voluntary Disclosures Program (VDP) effective October 1, 2025, the margin for error has narrowed significantly. Relief is still available—but only for those who act early and strategically.
For business owners, professionals, and incorporated taxpayers, the 2025 updates make one thing clear:
Voluntary disclosure is no longer just about fixing the past. It’s about managing risk.
What Is the CRA Voluntary Disclosures Program?
The Voluntary Disclosures Program (VDP) allows taxpayers to correct previously unreported income, missed filings, or inaccurate reporting before CRA enforcement begins.
When accepted, the CRA may grant:
- Relief from penalties
- Partial relief from interest
- Protection from prosecution
This relief is discretionary—not automatic—and how a disclosure is prepared materially affects the outcome.
What’s Changing in 2025?
A New Relief Framework
The CRA is replacing the old General vs. Limited programs with a clearer—but stricter—two-tier structure based on timing and CRA awareness.
Unprompted Disclosures (Maximum Relief)
If you come forward before the CRA identifies the issue:
- ✔ 100% penalty relief
- ✔ Up to 75% interest relief
- ✔ Protection from prosecution
Relief is granted under the CRA’s discretionary authority pursuant to Income Tax Act subsection 220(3.1).
Key takeaway:
The CRA is far more generous when you speak first.
Prompted Disclosures (Reduced Relief)
If the CRA has already contacted you about a specific compliance issue—or received third-party information tied to you—relief may still be available, but it is significantly reduced.
Typically:
- Penalty relief may still apply
- Interest relief is limited
- Protection from prosecution remains
Once enforcement begins, access to the VDP can disappear entirely.
Not All CRA Contact Disqualifies You
You may still qualify if you’ve received:
- General CRA education letters
- Broad industry communications
- Non-specific compliance reminders
However, once an audit or investigation begins on the specific issue, eligibility is lost.
This distinction is subtle—but decisive.
Look-Back Periods: What Must Be Disclosed
Under the updated framework, disclosures generally include:
- Canadian-source income: up to 6 years
- Foreign income or assets: up to 10 years
- GST/HST issues: up to 4 years
Documentation quality now plays a much larger role in acceptance.
Why the Risk Has Increased for Business Owners
CRA enforcement has become more targeted and data-driven.
In cases of misrepresentation, the CRA may reassess beyond normal limitation periods under Income Tax Act subsection 152(4).
Where gross negligence is alleged, penalties under subsection 163(2) can reach 50% of understated tax, before interest.
This is exactly what the VDP is designed to prevent.
Why Strategy Matters More Than Ever
A voluntary disclosure is not a form submission.
It is a risk-management exercise.
Because relief under subsection 220(3.1) is discretionary, how the disclosure is structured can materially impact the outcome.
How MiAccounting Handles Voluntary Disclosures
We don’t “file and hope.”
Our process includes:
- Pre-disclosure risk assessment
- Strategic classification (prompted vs. unprompted)
- Reconstruction of records
- CRA-defensible documentation
- Controlled CRA communication
Our focus: accuracy, credibility, and peace of mind.
Timing Is the Difference Between Relief and Regret
Once the CRA contacts you, leverage drops immediately.
In almost every case:
Earlier disclosure = lower total cost
Book a Confidential Consultation
If you’re unsure whether a voluntary disclosure is required—or whether your situation is still unprompted—we can help.
👉 Book a confidential consultation with MiAccounting today.
Fixing the past properly protects the future you’re building.
