CRA’s Voluntary Disclosures Program (Form RC199)

Maybe you never reported the rent from a condo back home. Maybe you forgot to file the form for your overseas bank account, or a few years of side-business income never made it onto your return. Whatever the reason, the worry tends to grow the longer it sits.

The good news is that the Canada Revenue Agency (CRA) has a formal way to put things right: the Voluntary Disclosures Program, usually called the VDP. If you come forward on your own before CRA comes to you, you can correct past mistakes and have most or all of the penalties and a large part of the interest waived. You still pay the tax you owe. What you save is the extra cost, and the stress, of being caught.

In this post, we’ll explain how the program works today, who can use it, and how to apply using Form RC199.

A friendlier program since October 2025

CRA rebuilt the VDP for applications received on or after 1 October 2025. In our view, it is now easier to use and more generous than before. Under the old rules, many people lost access to the program as soon as CRA had contacted them about anything. Today, the deciding question is simply whether CRA reached out to you first.

	Unprompted	Prompted
What it means	You come forward before CRA has raised the issue with you	You apply after CRA has flagged the specific issue, set a deadline to fix it, or received information about it from a third party
Penalties waived	100%	Up to 100%
Interest waived	75%	25%
Protection from prosecution	Yes, once relief is granted	Yes, once relief is granted

A general “education letter” from CRA, the kind sent to many taxpayers at once, does not make your application prompted. The lesson is simple: the earlier you act, the more you save.

Can you use the VDP?

Your application generally needs to meet these conditions:

• It is voluntary. CRA hasn’t already started an audit or investigation into the matter you’re disclosing.

• It involves a real penalty or interest cost. The mistake has to be one that would attract interest, penalties, or both.

• It is at least one year overdue. The tax year involved must be at least one year past its filing due date.

• It is complete. You disclose everything relevant for all the years involved, not just the easy parts, and you answer CRA’s follow-up questions promptly.

• You pay, or arrange to pay. You include payment of the estimated tax owing, or ask for a payment arrangement.

How far back you go matters too. Generally you provide records for the last 6 years. If the problem involves income or assets outside Canada, such as foreign rental income, overseas bank accounts or a company abroad, expect to go back 10 years.

The VDP is not the right tool when:

• the correction would give you a refund, or no tax or penalty is owing

• you only want to reduce penalties or interest CRA has already charged (that’s a separate taxpayer relief request)

• you want to make or change an election

• the years involved are covered by a bankruptcy or similar insolvency event

Applying with Form RC199: step by step

• Find out the full extent of the problem. Go through every year and every type of income before you file anything. CRA expects one complete disclosure, so finding a missed item halfway through can undermine your application.

• Talk it over anonymously, if you’re unsure. CRA offers informal, no-names “pre-disclosure” discussions. They aren’t binding, but they can help you decide whether to go ahead.

• Prepare the corrected returns and forms. These include amended or late tax returns, plus any missing information returns such as the T1135 for foreign property or the T1134 for foreign companies, with the supporting documents.

• Estimate the tax owing and arrange payment. Pay it with your application, or ask CRA for a payment arrangement.

• Complete Form RC199. It’s the redesigned, simpler application form. Describe what went wrong, which years are affected, and who helped you prepare the application.

• Submit it. You, or your representative, can upload it through CRA’s online services (My Account, My Business Account or Represent a Client), or send it by mail or fax.

• Respond promptly. CRA will confirm receipt and assign a date of disclosure. Answer any follow-up questions quickly and completely, because a slow or partial response can cost you the relief.

Situations we see most often

• Newcomers and returning residents with property, bank accounts or a business back home who didn’t realize Canada taxes their worldwide income

• Missed foreign reporting forms, especially T1135 (foreign property over $100,000) and T1134 (foreign companies). These carry penalties even when no tax is owing.

• Rental income from a basement suite, a cottage or a property abroad that was never reported

• Cash or gig income from side businesses, consulting or online platforms

• Unfiled returns for one or more years

• GST/HST that was collected but never remitted, or never registered for

A few practical tips

• Don’t wait for a letter. Once CRA contacts you about the issue, you drop from 75% interest relief to 25%.

• Don’t fix it quietly. Simply amending last year’s return doesn’t give you VDP protection for earlier years, and it may draw attention to them.

• Gather your records early. Foreign bank statements and property documents can take weeks to get from overseas.

• Get advice before you contact CRA. The way a disclosure is framed and documented affects the outcome.

How we can help

At Manu Bhai CPA Professional Corporation, we help individuals and business owners come forward with confidence. We review your situation, work out what needs to be disclosed, prepare the corrected returns and foreign reporting forms, complete Form RC199 and deal with CRA on your behalf, all in confidence.

If something from past years has been weighing on you, contact us for a confidential consultation at www.manubhaicpa.com.

This article is general information only and is not tax or legal advice for your specific situation. Rules can change, so please speak with a professional before acting.