---

NEW GST VOLUNTARY DISCLOSURE GUIDELINES!

UPDATED CRA VD PROGRAM GUIDELINES NOW IN EFFECT

On September 9, 2025, the Canada Revenue Agency (“CRA”) released GST/HST Memorandum 16-5-1 introducing major changes to its Voluntary Disclosure Program (“VDP”) in GST/HST matters (the “GST/HST VDP”), alongside IC00-1R7 – Voluntary Disclosure Programwhich outlines equally meaningful revisions to the income tax VDP.

This is the first update to the VDP since 2018 (which we wrote about back then here), and the changes appear aimed at encouraging more taxpayers to come forward and correct errors or omissions in their tax affairs (perhaps a result of less than anticipated take-up of the VDP program in recent years).  The new rules took effect Oct 1, 2025.

Increased Eligibility

Among the notable changes is increased eligibility.  Unlike the prior GST/HST VDP, applications eligible for relief will now be categorized as either “unprompted” or “prompted” – with BOTH categories being allowed, but with differing relieving provisions afforded.

“Unprompted” applications will generally include both total voluntary disclosures (i.e., those initiated with no prior CRA contact whatsoever) AND those following an education letter or notice that provides general guidance and filing information.  (Prior, there was a lot of uncertainty as to whether the latter group of disclosures would be considered voluntary or not!)

“Prompted” applications (also now allowed!) will generally include situations where CRA has had communication with the taxpayer about identified compliance issues, errors or omissions, and even after CRA has received third party information about the potential issues.

These changes – and particularly the addition of the "Prompted" category – are HUGE and shift Canada perhaps even further than the IRS’s Voluntary Disclosure Practice that American taxpayers will be familiar with, and almost to the point of the Prior Disclosure system that US Customs and Border Protection (“CBP”) employs.

Previously, virtually any contact from the CRA before a federal Canadian Voluntary Disclosure application (GST and Income Tax) raised questions about its ultimate approval.

Notably, even with the expansion above, eligibility is still restricted for applicants (1) already under audit or investigation or (2) viewed by CRA to be egregiously non-compliant – whatever that will mean!

Two-Tiered Relief

As indicated, two-tiered relief will now apply, although with relatively increased relief overall:

   1. Unprompted Disclosures get "General Relief": 75% interest relief and full (100%) penalty relief.

   2. Prompted Disclosures get "Partial Relief": 25% interest relief and full (100%) penalty relief.

Wash transactions remain eligible for full relief (i.e., 100% interest and penalty relief) provided conditions are met.

Documentary Requirements

GST/HST VDPs will now be subject to a general four (4) year rule for relevant documentation, although CRA may ask for documents beyond that.  However, it appears that past disclosure is required for “all known errors and omissions” (potentially going back decades!).

Takeaways

While the CRA has made the GST/HST VDP easier to initiate and expanded access, best practices are still to seek proper professional advice before opening any tax can of worms.  CRA may appear "ready to help", but that may mean totally different things based on one's particular perspective!

For assistance with CRA Voluntary Disclosures, click here.

Download a PDF copy of this Blog here.