First tax season under new CRA disclosure rules offers second chance to Canadians

Canadian Revenue Agency signage is shown in Ottawa on Friday, June 28, 2024. THE CANADIAN PRESS/Sean Kilpatrick

For Canadians who discovered errors, omissions or unreported income on past tax returns, this year’s tax season marked the first filing season under recently updated rules by the Canada Revenue Agency.

The Canada Revenue Agency (CRA) updated its ruling for the Voluntary Disclosures Program — a program that allows taxpayers to come forward voluntarily to correct mistakes in previously filed returns before the CRA contacts them about the issue.

In some cases, successful applicants may receive relief from penalties and partial interest charges.

The CRA introduced the changes to the program on Oct. 1, 2025, with the goal of simplifying the application process and making the rules easier for taxpayers to understand.

The updates came into effect just months before Canadians began preparing their 2025 tax returns, making this the first tax season operating under the revised framework.

For taxpayers who come forward on their own — deemed a “unprompted application” — you may receive a 100 per cent penalty relief, a 75 per cent interest relief or no referral for criminal prosecution related to the disclosed information.

For taxpayers who were contacted by the CRA, also known as a “prompted application,” and are not currently under audit or investigation, individuals may receive up to 100 per cent penalty relief, 25 per cent interest relief or no referral for criminal prosecution related to the disclosed information.

The program can apply to a range of situations, including unreported income, missed foreign asset reporting requirements, GST/HST errors and other filing omissions.

To qualify, disclosure must generally be voluntary, complete and involve information that is at least one year overdue.

The agency reviews applications on a case-by-case basis and determines whether relief should be granted.