CRA Voluntary Disclosure Program: What It Is and How to Apply

If you have made errors on past tax or customs filings - unreported income, undervalued imports, missed GST/HST remittances - the CRA Voluntary Disclosure Program (VDP) gives you a path to correct them without facing full penalties or prosecution. This guide explains what the voluntary disclosure program covers, who qualifies, how to apply, and what to expect after you submit.

What Is the CRA Voluntary Disclosure Program?

The Voluntary Disclosure Program is a CRA initiative that allows individuals and businesses to come forward and correct inaccurate or incomplete tax and customs information, in exchange for penalty relief and, in some cases, interest relief.

The program exists because CRA would rather collect the taxes and duties owed than spend resources pursuing enforcement against taxpayers who proactively come forward. For importers and businesses, this represents a meaningful opportunity to resolve compliance gaps before an audit uncovers them.

What Types of Disclosures Does the VDP Cover?

The VDP covers a wide range of errors, including:

• Unreported income - income not declared on a T1 or T2 return
• Customs undervaluation - imported goods declared at less than their actual value for duty
• Missed GST/HST filings - unreported remittances or incorrect input tax credit claims
• Unreported foreign income or assets - offshore accounts, foreign property over $100,000
• Excise tax errors - misreported or unremitted excise taxes

If you are an importer and you have ever used an invoice value that did not reflect the true transaction value of your goods, that is a customs undervaluation issue that the VDP can address.

What the VDP Does Not Cover

The program has firm exclusions. You cannot use the VDP if:

• CRA or CBSA has already initiated an audit, examination, or investigation into the issue you want to disclose
• Your disclosure is incomplete or inaccurate
• CRA has already received a third-party tip about the specific non-compliance
• The matter relates to a tax shelter arrangement CRA has already identified

If any of these conditions apply, a voluntary disclosure will be rejected, and submitting one could alert CRA to the issue without providing you any protection.

Who Qualifies for the VDP?

To qualify, your disclosure must meet four conditions: it must be voluntary, complete, involve a potential penalty, and relate to information that is at least one year past due.

The Four Eligibility Conditions

CRA applies four tests to every application:

1. Voluntary - you are coming forward on your own initiative, not in response to CRA contact
2. Complete - you are disclosing all relevant information, not just part of the issue
3. Penalty-involved - the information you are disclosing would attract a penalty if CRA discovered it
4. One year past due - the disclosure must relate to a filing obligation at least one year overdue

All four conditions must be met. An application that fails even one will be rejected.

The Two VDP Tracks: General and Limited

Since 2018, the VDP operates on two tracks:

General Track - for non-deliberate errors and omissions:

• Full penalty relief
• Partial interest relief (CRA may waive interest for up to 10 years in some cases)
• No referral for criminal prosecution on disclosed matters

Limited Track - for more serious non-compliance (deliberate tax evasion, large amounts, repeated non-compliance):

• No relief from gross negligence penalties
• Reduced interest relief
• No criminal referral protection on the disclosed matter
• Still preferable to doing nothing, as it demonstrates good faith

CRA assigns the track based on the nature and severity of the non-compliance. You do not choose the track yourself.

How to Apply to the CRA Voluntary Disclosure Program

Applications are filed using CRA Form RC199 and must include complete, accurate supporting documentation. Incomplete submissions can be rejected, or worse, trigger a closer look at your broader compliance history.

Step 1 - Assess Your Situation (and Consider Professional Advice)

Before filing, determine whether your situation qualifies and which track is likely to apply. CRA offers a no-name pre-disclosure consultation: you can contact the VDP anonymously to discuss eligibility before revealing your identity or submitting documentation.

For customs and import errors, a licensed customs broker can assess your exposure: review past import entries, calculate duties and taxes owed, and identify whether your situation is better handled through a VDP submission or an amended B3 entry.

Step 2 - Gather Your Documentation

A complete disclosure requires documentation that supports every number you are reporting. This typically includes:

• All relevant tax returns or customs entry summaries for the periods in question
• Commercial invoices, purchase orders, and transaction records
• Calculations showing the taxes, duties, or remittances owing
• Any foreign income documentation (account statements, property records)

Missing records will delay your application or result in rejection. CRA expects the disclosure to be complete when filed. You cannot submit a placeholder and fill in details later.

Step 3 - Submit Form RC199

Form RC199 is the formal VDP application. It must be submitted to the CRA Voluntary Disclosures Program office, not your local tax centre or CBSA port of entry. The form asks for:

• Your identifying information
• The type of tax or duty involved
• The years or periods being disclosed
• A description of why the non-compliance occurred

Submissions can be made by mail or through CRA's My Account or My Business Account portals.

What Happens After You Submit - CRA Processing Time

CRA voluntary disclosure processing time currently averages 6 to 18 months, depending on the complexity of the disclosure and which track applies. Limited track applications and disclosures involving large amounts or multiple years typically take longer.

After submission, you can expect:

1. Acknowledgement letter - CRA confirms receipt and assigns a file number
2. Assigned officer - a VDP officer is assigned to review your file
3. Review and correspondence - the officer may request additional documentation
4. Outcome letter - CRA issues a decision letter outlining the relief granted and the amounts owing

During the review period, CRA will not audit you for the matters disclosed. Once the outcome letter is issued, you will need to pay the taxes, duties, and remaining interest within the timeline specified.

What Relief Does the VDP Provide?

Accepted VDP applications receive penalty relief and may receive partial interest relief, but you still owe the taxes or duties outstanding, plus some interest. The program reduces your exposure; it does not eliminate it.

General Track:

• Civil penalties: Waived
• Interest: Partial relief possible
• Criminal referral: Protected for disclosed matters
• Prosecution risk: Significantly reduced

Limited Track:

• Civil penalties: Not waived for gross negligence
• Interest: Reduced relief
• Criminal referral: Protected for disclosed matters
• Prosecution risk: Reduced

The key takeaway: the VDP saves you from penalties and prosecution risk, but you must pay what you owe. For importers, this means paying the correct duty and GST/HST amounts for the undervalued or misclassified goods, plus interest, but without the 25% penalty that would otherwise apply.

VDP for Customs and Import Errors

Importers who have undervalued goods, misclassified tariff codes, or made CBSA filing errors can use the VDP to correct past customs declarations and reduce penalties before CRA or CBSA audits them.

Common Import-Related VDP Scenarios

The most common customs-related situations that lead to a VDP application include:

Invoice undervaluation - Using a lower invoice value than the actual transaction price to reduce value for duty is a customs violation. Whether deliberate or the result of a supplier's inaccurate paperwork, the importer is responsible. VDP allows you to correct the entry and pay the duties without triggering penalties.

Tariff misclassification - If goods were consistently classified under the wrong HS tariff code, often resulting in a lower duty rate, the VDP can be used to reclassify and remit the difference.

SIMA duty errors - Anti-dumping and countervailing duties under SIMA compliance rules are a common area of unintentional error. Importers who discover they have been paying the wrong SIMA duty rate can use the VDP to correct past entries.

Unreported importations - Goods brought into Canada without formal customs entry, including those imported through informal channels or misidentified as non-commercial, can be disclosed through the VDP.

How a Licensed Customs Broker Can Help

A licensed customs broker can identify potential customs VDP exposure, calculate the duties and taxes owed across affected import entries, and help prepare a complete, accurate disclosure package. This matters because CRA and CBSA require the disclosure to be complete. Partial disclosures are rejected and can trigger further scrutiny.

For importers, the biggest risk in a self-filed VDP application is understating the exposure. A broker who knows your import history can identify all affected entries, not just the ones you are aware of.

Not sure if your import errors qualify for the VDP? Our licensed customs brokers can review your past import entries and help you understand your compliance exposure before you file. Contact A & A Customs Brokers

Frequently Asked Questions About the Voluntary Disclosure Program

Can I make an anonymous VDP application?

Yes. CRA allows a no-name pre-disclosure consultation. You can discuss your situation with the VDP office without identifying yourself. If you decide to proceed, you then submit Form RC199 with your full details.

What is the CRA voluntary disclosure processing time?

Currently 6 to 18 months. Simple disclosures involving one tax type and a small number of years can be resolved faster. Complex multi-year, multi-issue disclosures on the Limited track often take longer.

Can I use the VDP if CRA has already contacted me?

No. If CRA has initiated an audit, investigation, or contacted you specifically about the issue you want to disclose, you no longer qualify for VDP protection on that matter. The disclosure must be voluntary, meaning CRA does not yet know about the issue.

Does the VDP apply to GST/HST?

Yes. Unreported GST/HST collectible, missed remittances, and incorrect input tax credit claims are all eligible for VDP disclosure. This is one of the most common uses of the program by small and mid-sized businesses.

Can a business (corporation) use the VDP?

Yes. Corporations, partnerships, trusts, and sole proprietors are all eligible. The eligibility conditions - voluntary, complete, penalty-involved, one year past due - apply equally to all entity types.

What happens if I do not come forward?

If CRA discovers the non-compliance through an audit or third-party tip, you lose access to VDP protection entirely. You will face the full penalty regime, which for customs undervaluation can be 25% of the unpaid duties, plus interest, plus potential criminal prosecution for deliberate evasion.

A & A Customs Brokers has helped Canadian importers navigate CBSA compliance for decades. If you are concerned about past customs declaration errors, speak with our team before CRA or CBSA finds them first. Get a free consultation