What Is the CRA’s Voluntary Disclosure Program (VDP) for GST/QST Issues?

The Voluntary Disclosure Program (VDP) is one of the most powerful tools available to businesses that made mistakes, filed late, failed to register, or underreported GST/QST. When used correctly, the VDP can eliminate penalties, reduce interest, prevent prosecution, and transform a potential tax crisis into a clean slate. Many Quebec businesses especially freelancers, contractors, and fast-growing startups use the VDP to fix past GST/QST errors before Revenu Québec or CRA audits begin.

This guide explains how the VDP works, who qualifies, what it covers, and how it protects businesses from serious tax consequences.

What Is the Voluntary Disclosure Program (VDP)?

The VDP is a formal program that allows taxpayers to:
• correct past GST/QST mistakes
• file missing returns
• register late for GST/QST
• correct underreported sales
• fix misapplied tax rates
• report previously unreported transactions
• amend incorrect GST/QST filings

The key requirement:
You must come forward voluntarily before Revenu Québec or CRA contacts you.

When Does the VDP Apply to GST/QST?

Businesses use the VDP for:
• failing to register for GST/QST after passing $30,000
• not remitting tax collected
• issuing invoices without charging GST/QST
• claiming ineligible ITCs/ITRs
• making repeated filing mistakes
• omitting income subject to GST/HST
• incorrect tax coding in accounting systems
• improperly treating taxable services as exempt or zero-rated
• failing to file for several years

These issues become extremely costly if discovered during an audit.

Who Qualifies for the VDP?

You qualify if:
• the disclosure is voluntary
• information is complete
• the error involves penalties or potential non-compliance
• the error is at least one year old (in most cases)
• you are not currently under audit, review, or investigation

You do not qualify if:
• Revenu Québec already contacted you
• the CRA issued a verification letter
• the error is the result of an aggressive tax scheme
• the disclosure is incomplete

The earlier you act, the more protection the VDP offers.

What Benefits Does the VDP Offer?

The VDP can provide:

1. Penalty Relief

Most GST/QST penalties (late filing, failure to register, failure to remit) can be waived.

2. Interest Reduction

Interest may be reduced depending on the severity of the issue.

3. No Prosecution

You cannot be criminally prosecuted for the disclosed issues.

4. Clean Compliance Reset

You start fresh with correct GST/QST registration, filings, and records.

5. Reduced Audit Risk

Once disclosure is accepted, the past issue is resolved and closed.

What Does the VDP NOT Provide?

• It does not eliminate the tax itself GST/QST owing must be paid.
• It does not waive all interest in every case.
• It does not protect you if the tax authority already found the problem.

How to File a Voluntary Disclosure for GST/QST Issues

A proper VDP package includes:
• full explanation of the error
• period covered
• complete calculations
• corrected GST/QST returns
• supporting documentation (invoices, contracts, books)
• payment or payment arrangement
• formal forms (RC199 for CRA, LM-1. VP for Revenu Québec)

Accuracy is extremely important an incomplete package can be rejected.

Why Businesses Use Professionals for VDP

The VDP is technical. Incorrect wording or incomplete disclosure weakens protection.
CPAs and tax lawyers ensure:
• the disclosure is accepted
• all errors are fully covered
• calculations are correct
• the taxpayer receives maximum penalty relief
• the narrative avoids self-incrimination

Many self-filed VDPs are rejected because the taxpayer unknowingly admits to more serious issues.

Real Examples of GST/QST VDP Cases

• A consultant exceeded the $30,000 threshold two years earlier. The VDP eliminated all penalties and reduced interest.
• A retailer collected GST/QST but forgot to remit. The VDP prevented prosecution and cleaned up filings.
• An online seller misapplied tax to U.S. customers. The VDP corrected three years of filings with limited interest.
• A construction contractor mixed personal and business expenses VDP fixed records and removed penalties.

Common Questions

Does the VDP guarantee acceptance?
No but proper documentation dramatically increases approval success.

Can I apply after receiving a verification letter?
No the disclosure must be truly voluntary.

Can the VDP fix both GST and QST?
Yes. In Quebec, disclosures often involve both taxes.

How far back can I correct?
Usually up to 10 years, depending on the issue.

Why Mackisen

With more than 35 years of combined CPA experience, Mackisen CPA Montreal prepares GST/QST voluntary disclosures that get accepted. We reconstruct records, calculate taxes owing, minimize penalties, and work with tax lawyers when needed to ensure full protection.