Voluntary Disclosures — Fixing Past Mistakes Safely

Introduction
Understanding voluntary disclosures fixing past mistakes safely is essential for taxpayers who realize they’ve made errors or omissions on past tax filings. Whether you failed to report income, overclaimed expenses, missed GST/HST or QST filings, forgot foreign reporting, or discovered payroll mistakes, the Voluntary Disclosures Program (VDP) is often the safest and most strategic way to correct past non-compliance. Applying correctly can reduce or eliminate penalties, limit interest, and protect you from prosecution. Applying incorrectly—or too late—can result in a full audit, reassessment, and severe penalties. This guide explains how voluntary disclosures fixing past mistakes safely works for CRA and Revenu Québec, and how taxpayers can protect themselves with proper filing strategies.

Legal and Regulatory Framework
Voluntary disclosures fixing past mistakes safely is governed by:

• CRA’s Voluntary Disclosures Program (VDP) under IC00-1R6
• Revenu Québec’s Voluntary Disclosure Program
• the Income Tax Act
• the Excise Tax Act (GST/HST)
• the Tax Administration Act (Québec)
• relevant tax jurisprudence

A voluntary disclosure can fix:

• unreported income
• missing GST/HST or QST returns
• incorrect expense claims
• payroll remittance errors
• real estate transactions not reported properly
• crypto or digital income omissions
• foreign assets not reported (T1135)
• not filing returns at all
• bookkeeping errors

Voluntary disclosures fixing past mistakes safely protects you when the CRA or ARQ has not yet contacted you first.

When You Should File a Voluntary Disclosure

Voluntary disclosures are recommended when:

• income was not fully reported
• expenses were overstated
• GST/QST was collected but not remitted
• GST/HST or QST returns were not filed
• payroll deductions were missed
• rental income (Airbnb, cottage, multi-unit) was omitted
• foreign property was not disclosed
• crypto profits were not reported
• late T4As or T5s were not issued
• multiple years of returns were never filed

The key to voluntary disclosures fixing past mistakes safely: you must apply before CRA or ARQ contacts you, or you lose eligibility.

The Two CRA VDP Streams

CRA has two streams:

1. General Program (No Gross Negligence Relief)

For minor or unintentional errors.
Benefits include:
• cancellation of penalties
• partial interest relief
• avoidance of prosecution

2. Limited Program (For Serious Omissions)

For significant non-compliance, repeated errors, or deliberate omissions.
Benefits include:
• no penalty relief, but
• protection from prosecution
• reduced gross negligence penalties

Most business-related issues fall into the Limited Program.

Revenu Québec uses a similar two-tier system.

Step-by-Step: How to File a Voluntary Disclosure

Here is voluntary disclosures fixing past mistakes safely in a structured, professional sequence.

Step 1: Determine Eligibility

To qualify:
• the disclosure must be voluntary
• the disclosure must be complete
• it must involve a penalty situation
• the information must be at least 1 year past due
• payment must be included or arranged

Step 2: Gather All Financial Documents

You must gather:
• bank statements
• receipts and invoices
• payroll summaries
• GST/QST records
• real estate documents
• foreign income statements
• crypto exchange records
• investment slips

Step 3: Reconstruct Accurate Tax Returns

CRA and ARQ require full accuracy.
This includes recalculating:
• income
• expenses
• GST/HST and QST
• payroll deductions
• capital gains
• foreign reporting

Step 4: Submit a Formal VDP Application

The application must include:
• a complete explanation of errors
• all corrected returns
• supporting documentation
• payment or payment arrangement
• legal basis for relief (optional but recommended)

For CRA: submission is done through My Account, My Business Account, or forms RC199/RC291.
For Québec: submissions are filed through the Revenu Québec VDP portal.

Step 5: CRA/ARQ Reviews the Disclosure

They may request:
• additional documents
• clarifications
• amended calculations
• proof of payment
• explanations for missing years

Proper handling at this stage is key to voluntary disclosures fixing past mistakes safely.

Step 6: Receive VDP Decision

You will receive one of:
• full acceptance
• partial acceptance
• denial (rare with professional preparation)

Accepted files receive penalty relief and prosecution protection.

Key Court Decisions

Courts have upheld that:

• CRA has discretion to accept or reject VDP applications
• taxpayers must be honest, complete and voluntary
• CRA cannot deny penalty relief arbitrarily
• VDP does not override statutory deadlines
• businesses must have documentation to support adjustments
• ARQ is allowed to apply stricter standards for Québec filings

These rulings highlight the importance of professional preparation.

Why CRA and Revenu Québec Enforce VDP Strictly

Voluntary disclosures are heavily monitored because:

• they involve lost government revenue
• many taxpayers try to “beat” CRA by filing after audit signals appear
• VDP is often used by non-compliant industries
• foreign reporting violations are widespread
• crypto and online income is underreported
• contractors often forget GST/HST and QST registration

Audit triggers that commonly lead to voluntary disclosures include:

• letters from CRA's audit division
• GST/HST QST discrepancies
• foreign income matching programs
• real estate flipping reports
• lifestyle audits
• bank account reviews

Voluntary disclosures fixing past mistakes safely must be filed early—before CRA or ARQ contacts you.

Mackisen Strategy

Mackisen CPA uses a fully structured approach to voluntary disclosures fixing past mistakes safely:

• determining eligibility under CRA and ARQ rules
• reconstructing accurate income, expenses and GST/QST
• preparing all documentation legally required
• drafting professional VDP submissions
• ensuring disclosure is complete and compliant
• negotiating payment arrangements
• protecting the taxpayer during follow-up queries
• ensuring maximum penalty relief
• reducing gross-negligence exposure
• preventing future audit risk through compliance planning

Our process ensures the strongest possible outcome.

Real Client Experience

Mackisen has filed hundreds of voluntary disclosures successfully:

• A real estate investor omitted rental income for four years. We filed full disclosures and eliminated all penalties.
• A self-employed consultant collected QST but never remitted it. We reconstructed returns and avoided prosecution.
• An IT contractor underreported PayPal income. Mackisen submitted a VDP and reduced interest dramatically.
• A business failed to issue T4A slips and underreported subcontractor payments. We corrected payroll and avoided penalties.
• A taxpayer did not report foreign crypto holdings. Mackisen filed a VDP with full compliance and avoided severe foreign-reporting penalties.

These cases show the power of voluntary disclosures fixing past mistakes safely.

Common Questions

• Will CRA audit me after filing a VDP?
Not typically—VDP protects you from punishment for past mistakes.

• Can CRA reject my disclosure?
Yes, if incomplete or not voluntary.

• Does VDP eliminate all penalties?
Often yes, depending on the program.

• Do I need to pay everything immediately?
No—payment arrangements are allowed.

• Can I file anonymously?
Only the initial disclosure can be “no-name”; final filing requires your identity.

Why Mackisen

With more than 35 years of combined CPA experience, Mackisen CPA Montreal helps taxpayers correct past mistakes safely and strategically. Whether you're dealing with unreported income, GST/HST or QST errors, foreign assets, payroll issues or bookkeeping gaps, our expert team ensures precision, compliance and full protection. When assisting clients with voluntary disclosures fixing past mistakes safely, Mackisen provides complete preparation, legal-quality argumentation and end-to-end negotiation with CRA and Revenu Québec