Overview
The VDP framework allows taxpayers and registrants to voluntarily correct errors or omissions in their tax filings without facing full penalties or prosecution. The new relief structure has three tiers:
- Full relief for qualifying wash transactions, providing 100% relief of applicable penalties and interest (unchanged from the pre-October 1, 2025, program).
- General relief for unprompted applications, providing 75% relief of applicable interest and 100% relief of applicable penalties.
- Partial relief for prompted applications, providing 25% relief of applicable interest and up to 100% relief of applicable penalties.
A person under audit or investigation – whether by the CRA or a law enforcement agency, securities commission, or other federally or provincially regulated authority – will generally be unable to take advantage of the VDP.
Unprompted and prompted disclosures
A disclosure is unprompted if it is made without any prior written or verbal communication about the specific compliance issue, other than education letters from the CRA providing general guidance or filing information.
A disclosure is prompted if there is prior written or verbal communication identifying the issue, deadlines to correct errors or omissions, or the CRA has third-party information indicating non-compliance.
What does this mean for businesses?
Potentially impacted businesses should consider how the new guidelines affect their particular circumstances and decide on an appropriate action plan. Key changes to the program include the following:
- The pre-October 2025 VDP program offers only 50% interest relief for Category 2 (general) disclosures, whereas the new guidelines offer 75% interest relief for unprompted disclosures.
- Prompted disclosures (such as a situation where a person receives a letter about unreported income or ineligible expenses) generally did not qualify for relief under the pre-October 2025 program, but may be eligible for 25% interest relief under the new guidelines.
- Large and sophisticated registrants were provided limited relief under the old program, whereas the new guidelines do not make reference to the person’s revenues or level of sophistication.
- The new guidelines specifically cover various additional indirect taxes - underused housing tax, luxury tax, digital services tax, global minimum tax, and the fuel charge – in addition to GST/HST, excise taxes, excise duties, softwood lumber export charges, and air travellers’ security charges.
Next steps
- Businesses should review their GST/HST and other indirect tax obligations in light of the CRA’s new VDP guidelines to determine compliance and whether a disclosure is warranted.
- Consider discussing your situation with BDO’s Indirect Tax team to assess eligibility and maximize available relief. We can assist you with addressing issues of concern via our tax health check process, enabling you to mitigate exposure for tax, interest, and penalties using the voluntary disclosure process.
The information in this publication is current as of September 12, 2025.
This publication has been carefully prepared, but it has been written in general terms and should be seen as broad guidance only. The publication cannot be relied upon to cover specific situations and you should not act, or refrain from acting, upon the information contained therein without obtaining specific professional advice. Please contact BDO Canada LLP to discuss these matters in the context of your particular circumstances. BDO Canada LLP, its partners, employees and agents do not accept or assume any liability or duty of care for any loss arising from any action taken or not taken by anyone in reliance on the information in this publication or for any decision based on it.