Qualifying for programme
Ensuring a valid disclosure
Making a voluntary disclosure
Options available if relief is denied


Taxpayers with unreported income should consider the merits of making a disclosure under the voluntary disclosure programme offered by the Canada Revenue Agency (CRA). The programme allows taxpayers that meet certain conditions the opportunity to disclose voluntarily previously unreported income and correct inaccurate or incomplete information filed with the CRA, and to pay the taxes owed plus interest, without penalties or prosecution.(1) If a taxpayer does not voluntarily disclose inaccurate or incomplete information previously filed with the CRA and the CRA discovers it (eg, as the result of an audit or an anonymous tip), then penalties will apply and the taxpayer could also be prosecuted if the circumstances so warrant.

The programme applies to voluntary disclosures for income tax, excise tax, excise duties, source deductions and goods and services tax (GST)/harmonised sales tax (HST). While the CRA is not required to grant relief, each case is assessed on its own merits and is reviewed against the voluntary disclosure programme criteria and conditions. Generally, the CRA's ability to grant relief for voluntary disclosure submissions is limited to any taxation year (or reporting period for GST/HST or excise tax purposes) ending within the 10 years prior to the year in which the submission is filed.

Qualifying for programme

The CRA will consider providing relief from penalties or prosecution under the voluntary disclosure programme if a taxpayer has:

  • claimed ineligible expenses on a tax return; or
  • failed to report taxable income, remit employee source deductions, report GST/HST, file an information return, report foreign source income taxable in Canada, or fulfil any obligation under applicable legislation.

However, the CRA will not provide relief in circumstances that fall outside the voluntary disclosure programme criteria, which circumstances include:

  • the use of elections or elective rollover provisions to obtain specific tax treatment for certain transactions;
  • income tax returns where no tax was owing or a refund was expected (these are handled under the CRA's normal processing procedures);
  • bankruptcy returns required to be filed by taxpayers in the year of bankruptcy;
  • post-assessment requests for penalty and interest relief; and
  • advance pricing arrangements governing the pricing of transactions between the taxpayer and a related non-resident.(2)

Normally, taxpayers can use the programme only once. However, the CRA may consider a second disclosure under the programme if the circumstances surrounding the second disclosure are beyond the taxpayer's control. At the time of making a second disclosure, the taxpayer must inform the CRA of the previous disclosure or the CRA can invalidate the second disclosure.

Ensuring a valid disclosure

To make a valid disclosure under the programme, a taxpayer must satisfy the following four conditions:

  • The disclosure must be voluntary – the CRA will generally consider the disclosure not to be voluntary if the taxpayer had knowledge of an audit, investigation or enforcement action set to be undertaken by the CRA or another authority with respect to the information being disclosed to the CRA, or if an enforcement action relating to the disclosure was initiated by the CRA or another authority against the taxpayer, an associated or related person (eg, a spouse, shareholder, corporation or partner), or a third party in certain circumstances, and the enforcement action is likely to have uncovered the information being disclosed. However, a disclosure may be valid if, for example, an enforcement action has been initiated with respect to one issue and the taxpayer is disclosing in respect of another unconnected issue.
  • The voluntary disclosure must be complete – the taxpayer must provide full and accurate facts and supporting documentation for all taxation years or reporting periods in which there was previously inaccurate, incomplete or unreported information. The taxpayer must also comply with requests for additional information made by a voluntary disclosure programme officer during the evaluation of the taxpayer's submission within stipulated deadlines.
  • The disclosure must involve the application or potential application of a penalty, such as a late filing penalty, a failure to remit penalty, an instalment penalty or a discretionary penalty.
  • The disclosure must include information that is
    • at least one year overdue; or
    • less than one year overdue if the disclosure is to correct a previously filed return or contains information that is at least one year overdue.

Making a voluntary disclosure

A voluntary disclosure must be made in writing by the taxpayer or the taxpayer's authorised representative(3) and submitted to the applicable voluntary disclosure programme tax centre serving the taxpayer's region.

The voluntary disclosure submission should include:

  • a completed voluntary disclosure programme taxpayer agreement form;
  • all relevant facts and supporting documents;
  • the reasons for the disclosure; and
  • an explanation of how all four of the validity conditions described above have been met.

In certain circumstances, the CRA may allow the taxpayer additional time (usually no more than 90 days from the effective date of disclosure)(4) to submit information that could not be included with the initial disclosure.

A taxpayer that is unsure about proceeding with a voluntary disclosure may have a preliminary discussion with a programme officer on a no-name basis. However, the CRA will only provide a final and binding decision if all the facts of the disclosure have been verified, and the identity of the taxpayer has been provided within 90 days of the effective date of disclosure.

Options available if relief is denied

The CRA will provide the taxpayer with written reasons for its decision if it denies relief altogether or grants only partial relief. If a taxpayer believes that the minister has failed to exercise discretion in a fair and reasonable manner, the taxpayer may make a written request to the director of the relevant CRA tax centre to reconsider the decision or apply to the Federal Court for judicial review of the decision. If the taxpayer's voluntary disclosure results in an assessment or reassessment with which the taxpayer disagrees, the taxpayer can file a notice of objection.

For further information on this topic please contact Natasha Miklaucic at Borden Ladner Gervais LLP by telephone (+1 416 367 6000), fax (+1 416 367 6749) or email ( The Borden Ladner Gervais LLP website can be accessed at


(1) Information Circular IC00-1R3, Voluntary Disclosure Programme, March 21, 2013. In certain circumstances, the CRA may also grant a taxpayer partial interest relief in respect of assessments for tax years or reporting periods preceding the taxpayer's three most recent years of returns.

(2) If the voluntary disclosure programme is not available, a taxpayer may consider requesting relief under the procedure described in Information Circular IC 07-1, Taxpayer Relief Provisions, with respect to income tax matters, or in GST/HST Memorandum 16-3, Cancellation or Waiver of Penalties and/or Interest, with respect to GST/HST matters.

(3) If a taxpayer makes a voluntary disclosure (either on a named or no-name basis) through an authorised representative, communications between the taxpayer and the representative will be privileged (ie, confidential and not subject to forced disclosure without the taxpayer's consent) only if the representative is a lawyer. Solicitor-client privilege does not apply to communications with accountants or other non-legal advisers.

(4) The effective date of disclosure is the earlier of:

  • the date that the CRA receives a completed and signed voluntary disclosure programme taxpayer agreement form; or
  • the date that the CRA receives a letter signed by the taxpayer (or the taxpayer's authorised representative) containing information similar to that required by the form.