IC00-1R6 - Voluntary Disclosures Program

From: Canada Revenue Agency

This version is only available electronically.

December 15, 2017


1. The Voluntary Disclosures Program (VDP) applies to disclosures relating to income tax, source deductions, excise duties under the Excise Act, 2001, excise tax and GST/HST under the Excise Tax Act, as well as charges under the Air Travellers Security Charge Act and Softwood Lumber Products Export Charge Act, 2006. This information circular provides information on the discretionary authority of the Minister of National Revenue (Minister) to grant relief from any penalty or interest under subsection 220(3.1) of the Income Tax Act (ITA). GST/HST Memorandum 16.5, Voluntary Disclosures Program, provides information on the discretionary authority of the Minister under the other legislation listed above.

2. This information circular applies to VDP applications received on or after March 1, 2018 and supersedes Information Circular IC00-1R5, Voluntary Disclosures Program, dated January 2017. In order for a taxpayer to qualify for the VDP relief outlined in Information Circular IC00-1R5, the CRA must have received the taxpayer’s application, including their name, on or before February 28, 2018.

3. In this information circular, the term “taxpayer” includes an individual, an employer, a corporation, a partnership, or a trust.

4. Unless otherwise specified, all legislative references in this information circular refer to the ITA. 


5. Through the VDP, taxpayers can make an application to correct inaccurate or incomplete information, or to disclose information not previously reported. For example, taxpayers may not have met their tax obligations if they claimed ineligible expenses, failed to remit source deductions, did not file an information return, or underreported their income.  

6. Effective March 1, 2018, VDP applications relating to income tax disclosures may fall into one of two tracks:

The first track is a General Program. If accepted under the VDP, these applications will be eligible for penalty relief and partial interest relief.

The second track is a Limited Program. Applications that disclose non-compliance where there is an element of intentional conduct on the part of the taxpayer or a closely related party will be processed under this Limited Program and if accepted, will receive reduced relief under the VDP. The determination of whether an application should be processed under the Limited Program will be made on a case by case basis, using the factors outlined in paragraph 20.

Details of the relief provided under the VDP for both tracks is described in paragraphs 13 to 18 below.

7. This information circular also explains how a taxpayer may make an application, including the proper information and documentation needed to support such an application. In addition, it outlines the administrative guidelines the Canada Revenue Agency (CRA) will follow in making a decision whether to accept the application under the VDP.

8. The information provided on the VDP process is only a guideline, is not intended to be exhaustive, and is not meant to restrict the spirit or intent of the legislation, or to unduly limit the Minister’s discretion.

Principles of the VDP

9. The VDP promotes compliance with Canada’s tax laws by encouraging taxpayers to voluntarily come forward and correct any previous errors or omissions in their tax affairs. If a VDP application is accepted by the CRA, taxpayers will have to pay the taxes owing, plus interest in part or in full. However, taxpayers would be eligible for relief from prosecution and, in some cases, from penalties that they would otherwise be subject to under the legislation.  

10. The majority of taxpayers comply with their obligations and an important principle of the VDP is that the relief be fair and not be considered to reward non-compliance. In other words, it is important to ensure that taxpayers who are fully compliant are not worse off economically than those seeking to correct their affairs through this program. The VDP is not intended to serve as a vehicle for taxpayers to intentionally avoid their legal obligations under legislation administered by the CRA.

11. The Minister is not required to grant relief in respect of all applications made to the VDP. Each request will be reviewed and decided on its own merits. In exercising discretion, the Minister is guided by principles of procedural fairness which require decisions to be made in good faith, in a manner that promotes the objects of the ITA. This information circular provides general guidelines on some of the relevant considerations in the exercise of this discretion. If relief is denied, the CRA will provide the taxpayer with an explanation of the reasons for the decision. In such cases, relief of arrears interest and any penalties payable may be requested and considered in accordance with the taxpayer relief provisions as described in IC 07-1R1, Taxpayer Relief Provisions.

12. The CRA reserves the right to audit or verify any information provided in a VDP application whether it is accepted under the VDP or not. If the CRA finds there is any misrepresentation due to neglect, carelessness, wilful default, or fraud, a reassessment can be issued at any time for any tax year to which the misrepresentation relates, not just those years included in the VDP application. Furthermore, any relief that may have been granted under the VDP will be cancelled as a result of the misrepresentation.

Relief Provided Under the VDP

Penalty Relief

13. If a VDP application is accepted as having met the conditions set out in paragraph 28, it will be considered a valid disclosure. Under the General Program, the taxpayer will not be charged penalties (subject to the limitation period explained in paragraph 17) and will not be referred for criminal prosecution with respect to the disclosure (i.e. for tax offences).  

14. Under the Limited Program, the taxpayer will not be referred for criminal prosecution with respect to the disclosure (i.e. for tax offences) and will not be charged gross negligence penalties even where the facts establish that the taxpayer is liable for such penalties. However, the taxpayer will be charged other penalties as applicable.

Interest Relief

15. In addition to penalty relief, if a VDP application is accepted by the CRA under the General Program, the Minister may grant partial relief in the application of interest against a taxpayer in respect of assessments for years preceding the three most recent years of returns required to be filed (subject to the limitation period explained in paragraph 18). Generally, this interest relief will be 50% of the applicable interest for those periods. Full interest charges will be assessed for the three most recent years of returns required to be filed.

16. If a VDP application is accepted into the Limited Program, no interest relief will be provided.

Limitation Period on Discretion for Relief of Penalties and Interest

17. The Minister’s ability to grant penalty relief is limited to any penalty that could apply to any taxation year that ended within the previous 10 years before the calendar year in which the application is filed.

18. The Minister’s ability to grant interest relief is limited to the interest that accrued during the 10 previous calendar years before the calendar year in which the application is filed. This is the case regardless of the taxation year (or fiscal period) in which the tax debt arose. For more information, see Revised 10-year limitation period for interest relief.

Providing VDP Relief

Circumstances Where Relief May be Considered

19. Relief under the VDP may be considered if a taxpayer:

  • failed to fulfill their obligations under the ITA,
  • failed to report any taxable income they received,
  • claimed ineligible expenses on a tax return,
  • failed to remit source deductions of their employees,
  • failed to file information returns, or
  • failed to report foreign sourced income that is taxable in Canada.

Circumstances Where Reduced Relief May be Considered Under the Limited Program

20. In general terms, the Limited Program provides limited relief for applications that disclose non-compliance where there is an element of intentional conduct on the part of the taxpayer or a closely related party. The following factors may be considered:

  • efforts were made to avoid detection through the use of offshore vehicles or other means,
  • the dollar amounts involved,
  • the number of years of non-compliance,
  • the sophistication of the taxpayer,
  • the disclosure is made after an official CRA statement regarding its intended specific focus of compliance (for example, the launch of a compliance project or campaign) or following broad-based CRA correspondence (for example, a letter issued to taxpayers working in a particular sector about a compliance issue).

For example, a taxpayer who opened an offshore bank account in 2010 and has been transferring undeclared business income earned in Canada to that account since that time would not normally qualify under the General Program.

21. Generally, applications by corporations with gross revenue in excess of $250 million in at least two of their last five taxation years, and any related entities, will be considered under the Limited Program.

22. The existence of a single factor will not necessarily mean that a taxpayer is eligible only for the Limited Program. For example, a sophisticated taxpayer may still correct a reasonable error under the General Program.

Circumstances Where Relief Will Typically Not be Considered

23. While special situations will be considered on a case-by-case basis, the following applications will generally not be considered under the VDP:

  • applications that relate to income tax returns with no taxes owing or with refunds expected; these would be handled using normal processing procedures.
  • elections; there are provisions within the various acts administered by the CRA which entitle taxpayers to choose or “elect” specific treatment of certain tax transactions, e.g. section 216 returns under the ITA. For more information about late, amended, or revoked elections, see IC07-1R1, Taxpayer Relief Provisions;
  • applications relating to an advance pricing arrangement (an agreement with a taxpayer that confirms the appropriate transfer pricing methodology);
  • applications that depend on an agreement being made at the discretion of the Canadian competent authority under a provision of a tax treaty, e.g. S-corporation agreements under Article XXIX(5) of the Canada-US Treaty;
  • applications where a person is in receivership or has become bankrupt;
  • post-assessment requests for penalty and interest relief; these requests will be considered to be retroactive tax planning.

24. Given the complexity of transfer pricing issues, applications relating to transfer pricing matters will be referred to the Transfer Pricing Review Committee for their consideration under subsection 220(3.1). For efficiency, taxpayers are invited to send their applications directly to:

Transfer Pricing Review Committee
c/o International Tax Division
344 Slater Street
Ottawa ON  K1A 0L5

A Second Application by the Same Taxpayer

25. Taxpayers are expected to remain compliant after being granted relief under the VDP. A taxpayer is generally entitled to obtain the benefits of the VDP only once. A second application from the same taxpayer will normally only be considered by the CRA if the circumstances surrounding the second application are both beyond the taxpayer’s control and related to a different matter than the first application.

26. The CRA will verify if a taxpayer has made a previous application. If it is discovered during the course of the review that the taxpayer had previously made an application, the CRA may refuse to give the second application further consideration under the VDP.

27. If an attempted second application is made for the same issue that was previously denied as incomplete due to information not being received by the stipulated date, then the second application will be denied.

Conditions of a Valid Application

28. A VDP application must meet the following five conditions to be valid and to qualify for relief. The application must:

  • be voluntary;
  • be complete;
  • involve the application or potential application of a penalty;
  • include information that is at least one year past due; and
  • include payment of the estimated tax owing.


29. Subject to the exceptions in paragraph 31, a VDP application will not be voluntary if:

  • the taxpayer was aware of, or had knowledge of an enforcement action (see paragraph 30) set to be conducted with respect to the information being disclosed to the CRA,
  • enforcement action (see paragraph 30) relating to the subject matter of the VDP application has been initiated against the taxpayer, or a person associated with, or related to, the taxpayer (this includes, but is not restricted to, corporations, shareholders, spouses and partners), or against a third party, where the purpose and impact of the enforcement action against the third party is sufficiently related to the present application; or
  • the CRA has already received information regarding the specific taxpayer’s (or a related taxpayer’s) potential involvement in tax non-compliance (for example, a leak of offshore banking or other information that names the taxpayer).

30. For purposes of the VDP, an “enforcement action” may include, but is not limited to:

  • an audit, examination, investigation or other enforcement action by the CRA or any other authority or administration, such as, but not limited to, a law enforcement agency, securities commission, or federal or provincial authorities;
  • requests, demands or requirements issued by the CRA, relating to unfiled returns, unremitted taxes/ instalments, deductions required at source; (although these actions may only pertain to one specific year, the procedure will be considered to be an enforcement action, for purposes of the VDP, for all taxation years); 
  • requests, demands or requirements which have been issued with reference to other tax affairs of the taxpayer, partners of the taxpayer, trusts in which the taxpayer is a settlor, trustee or beneficiary, or corporations associated with or related to the taxpayer; and/or
  • direct contact by a CRA employee for any reason relating to non-compliance (e.g. unfiled returns, audit, collection issues). 

31. Not all CRA initiated enforcement action may be cause for a VDP application to be denied by the CRA. Examples of this include:

  • a letter from the CRA inviting the taxpayer to use the VDP to correct their tax affairs; however, this letter would be a factor that could result in the application being considered under the Limited Program; or
  • a recent audit of a taxpayer was related to a GST/HST issue. The same taxpayer is submitting a VDP application for an amount of source deductions (payroll), which was withheld but not remitted to the CRA as required. There may be no correlation between these two taxation issues and as such, the enforcement action on the GST/HST account may not be cause to deny the VDP application.


32. A taxpayer’s VDP application must be made for all relevant taxation years where there was previously inaccurate, incomplete or unreported information regarding their tax affairs, including any non-arm’s length transactions and circumstances. In cases where books and records no longer exist, the taxpayer should make all reasonable efforts to estimate the income for those years.

For example: A taxpayer opened an offshore bank account in 2000 with an initial deposit of $400,000. Books and records only exist for the years 2007 to 2015. As of January 1, 2007, the balance in the bank account was $2,500,000. In this case, the taxpayer should make all reasonable efforts to estimate all the unreported pre-tax earnings that were deposited to the account during that time, as well as the interest income that would have been earned in the years where books and records are no longer available (2000 to 2006) in order for the VDP application to be considered complete.

33. There may be extraordinary circumstances where the taxpayer cannot submit all of the information or documentation with their VDP application. In these circumstances, a request for an additional specified period of time must be made in writing at the time the application is submitted. Upon review of the request, the CRA may allow the taxpayer a period of time to submit such information in order to complete the application. Normally this period of time is no more than 90 days from the effective date of disclosure (EDD) (paragraphs 50 to 55).

34. While the information provided in an application must be complete, the application may not be disqualified simply because it contains minor errors or omissions. As well, if the CRA is satisfied that the taxpayer has provided all available information and legitimately cannot locate or obtain certain documents (e.g. relating to a deceased relative) or has made reasonable efforts to estimate income amounts related to years for which documentation is unavailable, the application may be considered to be complete. Each application will be reviewed on its own merits.


35. A request for VDP relief must involve the application, or potential application of a penalty. The penalty type that could normally be imposed may be a late filing penalty, a failure to remit penalty, an instalment penalty, an omission penalty, or a gross negligence penalty.

36. In the event a penalty does not apply, the taxpayer cannot seek relief through the VDP. However, the information should still be submitted and it will be handled through the CRA’s normal processing procedures.

One Year Past Due

37. The VDP application must include information that relates to a taxation year that is at least one year past the due date for filing. The program is not meant to be used as a de facto filing extension. However, an application that includes information that relates to a taxation year that is more than one year past due and information that is more recent may be considered.

38. For example, a taxpayer had not filed tax returns for the years 2012 to 2016. On November 10, 2017, the taxpayer submitted all of the tax returns requesting that they be considered under the VDP. Although the 2016 tax return is less than one year past due (filing deadline of April 30, 2017), the CRA will consider the 2016 return as part of the VDP application, provided that all other conditions have been met.

In contrast, the 2016 tax return would not be considered for VDP treatment if it is the only return being filed. In that case, the 2016 return would be handled through the CRA’s normal processing procedures.


39. Subject to paragraph 40, the taxpayer must include payment of the estimated tax owing with their VDP application.

40. When the taxpayer does not have the ability to make payment of the estimated tax owing at the time of the VDP application, they may request to be considered for a payment arrangement subject to approval from CRA Collections officials. The taxpayer will have to make full disclosure and provide evidence of income, expenses, assets, and liabilities supporting the inability to make payment in full. In some cases, the payment arrangement will need to be supported by adequate security.

Making a VDP Application

Pre-Disclosure Discussion

41. Taxpayers who are unsure if they want to proceed with an application are given an opportunity to participate in preliminary discussions about their situation on an anonymous basis to get insight into the VDP process, a better understanding of the risks involved in remaining non-compliant, and the relief available under the VDP. These discussions with a CRA official are for the benefit of the taxpayer; they are informal, non-binding, and may occur before the identity of the taxpayer is revealed.  For complex technical reporting issues or questions, taxpayers will be referred to a CRA official in a specialized audit area to discuss their situation on an anonymous basis.

42. These discussions do not constitute acceptance into the VDP and have no impact on CRA’s ability to audit, penalize, or refer a case for criminal prosecution.

Information/Documentation Required

43. Taxpayers should use Form RC199, Voluntary Disclosures Program (VDP) Application to apply for VDP. If a taxpayer is not using Form RC199, the VDP application should contain all of the information requested on that form. All CRA returns, forms and schedules needed to correct the non-compliance must be included with the application.

44. Where a taxpayer received assistance from an advisor in respect of the subject matter of the VDP application, the name of that advisor should generally be included in the application.

45. It is expected that taxpayers and/or their representatives will co-operate in the voluntary disclosure process. While the VDP application is being evaluated, the CRA official may request documents, records, books of account, as well as other additional specific documentation, for example information relating to foreign accounts and assets, financial institutions and advisers. The taxpayer must comply with such requests within the stipulated timeframes, and provide sufficient detail to allow the facts of the case to be verified. If a taxpayer refuses to provide complete documentation or if the CRA is not satisfied that the application is complete, then the taxpayer will in most cases not be eligible for relief.

46. Due to the nature of a particular application, referrals to other programs within the CRA may be necessary in order to fully analyze the application. Furthermore, applications involving complex issues or large dollar amounts will be reviewed for completeness by a specialist area prior to the VDP application being accepted.

Authorization of a Taxpayer’s Representative

47. The taxpayer’s authorized representative can submit the application for relief under the VDP. In this case, both the taxpayer and the authorized representative must sign the VDP application (paragraph 43).

48. The taxpayer must grant proper authorization to the representative by submitting a signed copy of the appropriate authorization form.

  • For individuals (income tax matters), through the online services in My Account, in writing, or by sending a completed Form T1013, Authorizing or Cancelling a Representative.  
  • For all business entities (all business program accounts), through the online services in My Business Account, in writing, or by sending a completed Form RC59, Business consent for access by telephone and mail.
  • For matters pertaining to Canada Pension Plan or Employment Insurance disclosures, submit Form CPT139, Canada Pension Plan (CPP)/Employment Insurance (EI) – Authorizing or Cancelling a Representative.

A copy of the authorization should be attached to the VDP application.

49. The CRA cannot discuss any confidential information with a representative prior to receiving the appropriate authorization. 

The Effective Date of a Disclosure (EDD)

50. The EDD is the date the CRA receives a completed and signed VDP application (paragraph 43).

51. From this date, provided that the application meets the five validity conditions (paragraph 28), the taxpayer is granted protection from the initiation of prosecution action related to the disclosure and penalty relief, where applicable regarding the amounts included in the disclosure.

52. If the application does not otherwise meet the five conditions to qualify for relief, the application will not be accepted into the VDP and therefore there is no EDD.

53. If necessary, the taxpayer may have up to 90 days from the EDD for the submission of additional CRA-requested information and/or documentation to complete the application.

54. If this time frame is not sufficient due to the complexity of the application or other extraordinary circumstances, CRA officials may authorize an extension of this period, upon receipt of a written request from the taxpayer or an authorized representative. The additional information must be provided within the stipulated time frame.

55. If the additional information and/or documentation is not received within the stipulated time frame, the CRA may commence enforcement action wherein penalties and interest may be imposed and an investigation and subsequent prosecution action may be initiated.

Where to Make an Application

56. The completed VDP application must be sent either:

  • Electronically:

Through My Account, My Business Account, or Represent a Client (for more information go to Submit Documents Online)

  • By mail:

Voluntary Disclosures Program
Shawinigan National Verification and Collections Centre
4695, Shawinigan-Sud boulevard
Shawinigan, QC  G9P 5H9

  • By fax:


Acceptance of a VDP Application

57. If it is determined that the five conditions to qualify for relief (paragraph 28) have been met, the taxpayer will be advised in writing of the following:

  • the application has been accepted into the VDP (and for applications received on or after March 1, 2018, under which track – see paragraph 6),
  • the taxation years eligible for VDP relief,
  • the EDD,
  • the disclosed information may be referred to another CRA program area, and
  • the disclosed information will be sent to the appropriate area for processing the assessment or reassessment.

Denial of a VDP Application

58. If it is determined that any of the five conditions to qualify for relief (paragraph 28) have not been met or it is a circumstance where the VDP application will typically not be considered (paragraph 23); the taxpayer will be advised in writing that:

  • the application has been denied,
  • the disclosed information may be referred to another CRA program area,
  • the disclosed information may result in an assessment or reassessment,
  • penalties and interest may be levied, and
  • in certain circumstances, an investigation and prosecution may be initiated.

Right of Redress for the Taxpayer

Second Administrative Review

59. There is no right of objection under the ITA for a taxpayer to dispute a discretionary decision that denied relief, or allowed only partial relief. However, if the taxpayer believes that the Minister has not exercised discretion in a fair and reasonable manner, the taxpayer may request in writing that the Assistant Director of the Shawinigan National Verification and Collections Centre review and reconsider the original decision. The taxpayer has the opportunity at that time to make additional representations for the CRA to consider. The CRA will not consider a request for a second review if an application was denied because the information was not previously submitted within the stipulated time frame. 

60. The Assistant Director may designate a delegated authority, not involved in the previous review and decision, to carry out the second administrative review on their behalf.

Judicial Review

61. Where a taxpayer believes the Minister has not exercised discretion in a fair and reasonable manner, the taxpayer may make an application to the Federal Court for a judicial review of the Minister’s discretionary decision, pursuant to section 18.1 of the Federal Courts Act, within 30 days from the date the notification of the decision was communicated to the taxpayer.

62. To request a judicial review, the taxpayer must send a completed Form 301, Notice of Application, with the appropriate filing fee, to the registrar of the Federal Court. For more information on how to file an application for judicial review or other general enquiries, contact the Courts Administration Service at 1-800-663-2096, or go to their website at www.cas-satj.gc.ca.

63. If the Federal Court is of the view that the Minister’s discretion was not properly exercised, the Court may set aside the Minister’s decision and refer the request back to the CRA for reconsideration by another delegated official.

64. As a general rule, taxpayers should request a second administrative review from the CRA before filing an application for a judicial review with the Federal Court.

Objection Rights

65. Under subsection 165(1.2), a taxpayer is prohibited from filing an objection to dispute the assessment of penalties and interest made under subsection 220(3.1). This applies to VDP applications that have been accepted under either the General or Limited Program.

66. Furthermore, if a taxpayer’s application is accepted under the Limited Program, in consideration of the relief being provided, the taxpayer will be required to waive their rights to object and appeal in relation to the specific matter disclosed in the VDP application and any specifically related assessment of taxes. However, this waiver will not prevent a taxpayer from filing a Notice of Objection in circumstances where the assessment includes a calculation error, relates to a characterization issue (such as income versus capital gain treatment), or relates to an issue other than the matter disclosed in the VDP application.

Need More Information

67. For more information on the Voluntary Disclosures Program, go to Voluntary Disclosures Program - Overview.

68. All income tax technical publications are available on the CRA webpage Technical information – Income Tax.

69. To make an income tax enquiry by telephone:


70. If you have any comments about this information circular, please write to us at:

Voluntary Disclosures Program
Domestic Compliance Programs Branch
Canada Revenue Agency
Ottawa ON  K1A 0L5 

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