What to Know About Voluntary Disclosures (VDP)

If you’ve realized that you made a mistake on your tax return — or didn’t file at all — you’re not alone. Many Canadians discover unreported income, missed filings, or incorrect claims years later.

The good news?
The Canada Revenue Agency (CRA) offers a solution called the Voluntary Disclosures Program (VDP).

This guide explains what VDP is, who qualifies, and when it makes sense to apply.

What Is the Voluntary Disclosures Program (VDP)?

The Voluntary Disclosures Program allows taxpayers to come forward before the CRA contacts them to correct errors or omissions on past tax returns.

If accepted, the CRA may:

• Cancel penalties

• Reduce or eliminate interest

• Avoid criminal prosecution

You still have to pay the taxes owed, but VDP can significantly reduce the financial damage.

What Types of Issues Can Be Disclosed?

VDP applies to many situations, including:

• Unreported employment or self-employment income

• Cash income or tips not reported

• Missed GST/HST filings

• Rental income not declared

• Foreign income or assets

• Incorrect deductions or credits

• Years of unfiled tax returns

If the mistake affects your taxes, it may qualify.

Key Requirement: It Must Be Voluntary

This is the most important rule.

Your disclosure must be voluntary, meaning:

• CRA has not contacted you yet

• You have not received an audit or review notice

• CRA is not already investigating the issue

Once CRA contacts you, VDP is usually no longer available.

Other CRA Conditions for VDP Acceptance

To qualify, your disclosure must:

• Involve a penalty or potential penalty

• Be complete and accurate

• Include information for at least one year past due

• Include payment or a plan to pay

Partial or incomplete disclosures are often rejected.

Types of VDP Relief

CRA offers two levels of relief:

General Program

• Penalties may be cancelled

• Partial interest relief may apply

Limited Program

• Penalties reduced, not eliminated

• Interest usually still applies

Which one applies depends on the seriousness of the issue and your tax history.

What VDP Does NOT Do

VDP does not:

• Eliminate the tax owed

• Apply automatically

• Guarantee full relief

• Protect against future audits

• Fix errors without documentation

This is why proper preparation matters.

Why People Get Rejected From VDP

Common reasons include:

• CRA already contacted the taxpayer

• Disclosure was incomplete

• Missing years or missing income

• No reasonable explanation

• Incorrect filing method

A rejected VDP application can make things worse by alerting CRA to the issue.

Should You Apply on Your Own?

VDP applications are technical and detailed.
Mistakes can lead to:

• Rejection

• Full penalties

• Deeper audits

• Increased interest

A tax professional helps ensure:

• Correct disclosure strategy

• Proper documentation

• Clear explanations

• Best chance of approval

How TikiTax Can Help With VDP

At TikiTax, we help clients:

• Review eligibility for VDP

• Prepare complete disclosures

• File back taxes correctly

• Communicate with CRA

• Reduce penalties and stress

We handle the process carefully and confidentially.

Final Takeaway

If you’ve made a tax mistake, waiting only makes things worse.
The Voluntary Disclosures Program gives you a chance to fix past errors before CRA finds them.

But timing and accuracy are critical.

If you think VDP may apply to you, it’s best to act early and get professional guidance.