CRA Voluntary Disclosures Program (Tax Amnesty): Fixing Past Mistakes – A Complete Guide by a Montreal CPA Firm Near You

Introduction

If you forgot to report income, failed to file returns, claimed ineligible deductions, didn’t disclose foreign assets, or made mistakes in GST/HST or payroll filings, the CRA Voluntary Disclosures Program (VDP) may be your lifeline. The VDP allows taxpayers to correct past errors before CRA contacts them—potentially eliminating penalties, reducing interest, and avoiding criminal prosecution. But the program is complex, evidence-based, and unforgiving if done incorrectly. This guide explains how the CRA VDP works, who qualifies, what relief you can receive, and how to apply successfully.

Legal and Regulatory Framework

The VDP is governed by the Income Tax Act, the Excise Tax Act (for GST/HST), and CRA administrative guidelines (IC00-1R6). The program allows taxpayers to correct: unreported income, unfiled tax returns, missing information slips, GST/HST errors, payroll remittance mistakes, and foreign income reporting failures (including T1135). The VDP has two streams: the General Program (full relief for most taxpayers) and the Limited Program (reduced relief for serious non-compliance or deliberate avoidance). Relief is never guaranteed—applications must meet strict criteria and be filed before CRA initiates audit or enforcement action.

Key Court Decisions

In Bozzer v. Canada, courts confirmed CRA’s authority to grant relief even for older tax years as long as interest accrued within the 10-year window. In Guindon v. Canada, the Supreme Court emphasized that taxpayers involved in false schemes may face severe penalties unless they regularize through programs like VDP. In Nassif v. Canada, relief was denied because the taxpayer waited too long—showing the importance of filing before detection. These cases illustrate why timely, well-prepared VDP submissions matter.

Who Should Apply for the VDP?

You should consider the VDP if you: forgot to report employment or investment income; didn’t file tax returns for past years; earned cash income not reported to CRA; failed to report crypto gains or foreign income; missed T1135 foreign asset reporting; underreported rental or Airbnb income; incorrectly claimed expenses; made GST/HST errors; misclassified contractors/employees; missed payroll remittances; or participated in risky tax schemes. If you suspect CRA may discover your error, apply immediately—once CRA contacts you, it’s too late.

Eligibility Requirements

To qualify, your disclosure must be:

• Voluntary (no CRA contact about the issue)

• Complete (full disclosure of all years and errors)

• Involving a penalty (no relief if no penalty applies)

• At least one-year past due (for income tax)

• Accurate and truthful
  If CRA finds your submission incomplete or misleading, they can terminate it and proceed with full audit penalties.

Types of Relief Available

Depending on which program you qualify for:

General Program (Most Relief)

• No penalties

• Partial interest relief (typically 50%)

• No criminal prosecution

Limited Program (For Serious Cases)

• Penalties reduced but not waived

• No interest relief

• No criminal prosecution
  Applications are categorized based on severity of non-compliance, taxpayer behavior, and the nature of omitted income (e.g., offshore assets, repeated failures).

What You Must Disclose

A full VDP submission must include: all unreported income, all unfiled returns, corrected GST/HST filings, supporting documents, financial statements, foreign asset records, crypto transaction logs, and explanations of how errors occurred. CRA requires complete cooperation and detailed documentation.

How to Apply

VDP submissions must be filed using CRA Form RC199 (or online through My Account/My Business Account). Steps include: determining all affected years, gathering evidence, calculating tax owed, drafting a detailed disclosure letter, submitting supporting documents, and paying estimated tax where possible. Submissions must be carefully crafted—poorly written disclosures are often denied.

What Happens After You Apply

CRA reviews the submission for completeness, requests additional records if needed, determines eligibility for General or Limited relief, issues reassessments for each year, and applies relief to penalties and/or interest as allowed. Once accepted, CRA cannot pursue criminal charges for the disclosed issues.

Common Mistakes That Lead to Denial

Taxpayers often: file after CRA contact, disclose only some errors, underestimate tax owing, hide foreign income, fail to disclose cash income, submit incomplete documentation, or misunderstand T1135 rules. These mistakes invalidate the application and expose you to full penalties.

Why Timing Is Critical

If CRA sends a letter, audit notice, or phone call—even if unrelated—you may lose eligibility. VDP must be filed before CRA initiates action related to the issue. Hesitation is dangerous.

Mackisen Strategy

At Mackisen CPA Montreal, we prepare complete, defensible VDP submissions that maximize relief. We: reconstruct income records, prepare amended T1/T2/GST returns, correct T1135 filings, build full disclosure packages, draft persuasive relief letters, calculate tax owing, manage CRA negotiations, and ensure legal compliance. Our detailed approach significantly increases acceptance rates.

Real Client Experience

A Montreal contractor avoided $95,000 in penalties after disclosing five years of unreported cash income. A real estate investor corrected foreign income issues and avoided criminal prosecution. A freelancer reversed GST/HST penalties through a strong VDP submission. A business owner with unfiled payroll remittances avoided gross negligence penalties after our intervention.

Common Questions

Will CRA forgive all penalties? In the General Program—yes. Can CRA reject my application? Yes—if incomplete or after CRA contact. Is VDP anonymous? Only during the initial “no-name” discussion. Can I apply for one year only? No—must disclose all years. Does VDP clear criminal exposure? Yes—once accepted.

Why Mackisen

With more than 35 years of combined CPA experience, Mackisen CPA Montreal handles VDP submissions with precision, confidentiality, and expertise. We help taxpayers correct past mistakes safely, avoid penalties, and regain full CRA compliance.