# CRA Voluntary Disclosure Program and GST late-filing penalties since October 2025 How the CRA Voluntary Disclosure Program works since October 2025, what it relieves, and what late GST filing costs if you wait. Dated, CRA-sourced. A late GST/HST return costs a penalty of 1% of the tax owing, plus a quarter of a percent for each full month late, up to 12 months [3]. Since 1 October 2025, the CRA's Voluntary Disclosures Program (VDP) removes all of that penalty and 75% of the interest, if you apply before the CRA contacts you about it. Once the CRA has written to you about the problem, the interest relief drops to 25% [1]. Either way, you still owe the tax itself. So for a business that's behind, the question isn't whether it will pay. It's how much extra it will pay, and that depends on who moves first: you or the CRA. This guide shows how the penalty grows, what the VDP relieves, who qualifies, and what you need before you apply, with a worked example in dollars. General information, not advice. Every rule here is from the CRA's own pages, read on 2026-10-19. Whether to apply, and how, is your decision, made with your accountant. ## What is the GST late filing penalty? The penalty on a late GST/HST return has two parts [3]: 1. 1% of the net tax owing, and 2. a quarter of that 1% for each complete month the return is late, up to 12 months. At 12 months late, the penalty reaches 4% of the tax owing. On top of the penalty, interest compounds daily, on the tax and on any penalty owing [3]. For October 1 to December 31, 2026, the CRA's interest rate on overdue GST/HST is 7% a year [6]. Because the penalty is a share of the net tax owing, a late return that shows nothing owing, or a refund, has no late-filing penalty. The clock starts earlier than many owners expect. You owe GST/HST on a sale on the earlier of the day you're paid and the day payment is due, and the CRA usually treats the invoice date as the due date [4]. So tax on an invoice you sent in March belongs in March's period, even if the client paid in June. If you should have charged GST/HST and didn't, you still owe it, in the period you should have charged it [4]. A business that invoiced without GST pays that tax out of its own pocket. ## What does the Voluntary Disclosure Program relieve? | # | Your application | Penalty relief | Interest relief | |---|---|---|---| | 1 | Unprompted: the CRA hasn't contacted you about the issue | 100% | 75% | | 2 | Prompted: you apply after the CRA has contacted you about the issue | Up to 100% | 25% | These are the levels the CRA normally applies, since 1 October 2025 [1]. The tax itself is never reduced. The tempting move is to wait, catch up quietly when there's time, and hope the CRA doesn't notice first. But every month you wait, each late return's penalty grows by another quarter-point, until the 12-month cap. The bigger risk is a letter. Your application is prompted if, before you apply, the CRA writes to you about a specific error on your account, or sends a letter giving you a deadline to file or correct it. It's also prompted if the CRA has already received information from someone else about you, or a related person, not complying [2]. A prompted application loses two-thirds of the interest relief. A general education letter that only gives guidance on a topic doesn't count; your application stays unprompted [2]. ## Who qualifies? The CRA lists these conditions for GST/HST [2]: 1. **It's voluntary.** You can't apply about something already under audit or investigation, by the CRA or another authority, for you or a related person. 2. **At least one reporting period is past its due date.** 3. **There is a penalty, interest, or both** on the error or omission. 4. **It's complete.** You include all relevant information for every required period and supporting documents for the most recent four years, disclose every error you know about, and answer the CRA's questions promptly. 5. **You pay the estimated tax**, or ask for a payment arrangement. The VDP doesn't cover penalties or interest already assessed, a claim that only raises your input tax credits or rebates, making or changing an election, or years with an insolvency event [2]. An eligible application also protects you from prosecution, and gross-negligence penalties don't apply to what you disclose. ## What do you need before you apply? Condition 4 is where the work is. Before anyone can fill in a VDP application, the books for every late period have to be up to date: 1. Every sale recorded, with the GST/HST on it in the period of its invoice date. 2. The input tax credits for each period, supported by receipts. 3. The net tax owing worked out for each late return. You keep records for six years from the end of the last year they relate to, and a GST/HST return more than six years overdue still has to be filed [5]. The [sales tax step of the month-end close](/month-end-close-checklist/sales-tax) shows what has to tie for each period. So the order is: bring the books up to date, work out what's owing for each period, then decide with your accountant whether to apply and how. ## How do you apply for the Voluntary Disclosure Program? You apply on [Form RC199, Voluntary Disclosures Program (VDP) Application](https://www.canada.ca/en/revenue-agency/services/forms-publications/forms/rc199.html), and send it to the CRA either online or by mail or fax [2]: 1. **Online:** through the Submit documents online service in My Account, My Business Account or Represent a Client. 2. **By mail:** Voluntary Disclosures Program, Shawinigan National Verification and Collections Centre, 4695 Shawinigan-Sud Boulevard, Shawinigan QC G9P 5H9. 3. **By fax:** 1-888-452-8994. The late returns go in with the application, not before it. The supporting documents needed to correct the problem, "for example, returns", for the most recent four years "must be included with the application" [2]. You can apply yourself, or an authorized representative can submit it for you [2]. Before you apply, you can also ask the CRA for a pre-disclosure discussion; businesses call 1-800-959-5525 [2]. This page covers federal GST/HST only. BC PST has its own rules: a late or missing PST return brings penalties, interest and loss of commission, and an unfiled return is assessed for estimated PST, plus penalty and interest [7]. ## Worked example: eight months behind on GST A made-up business files GST quarterly and owes $6,000 of net tax each quarter. It hasn't filed for two quarters. One return is 8 months late and the other is 5 months late. | # | Return | Months late | 1% part | Monthly part | Penalty | |---|---|---|---|---|---| | 1 | First quarter | 8 | $60 | 8 x $15 = $120 | $180 | | 2 | Second quarter | 5 | $60 | 5 x $15 = $75 | $135 | | 3 | Both | | | | $315 | The business owes $12,000 of tax, $315 of penalties, and interest compounding daily on all of it. At 7% a year, the rate for October to December 2026, interest on $12,000 comes to roughly $70 a month [6]. 1. **It applies to the VDP before the CRA contacts it:** the $315 of penalties goes, and so does 75% of the interest. It pays the $12,000 and a quarter of the interest. 2. **It waits, and a CRA letter about the late returns arrives first:** up to the full $315 can still go, but only 25% of the interest. It pays the $12,000 and three-quarters of the interest. 3. **It waits four more months without applying:** each return's penalty grows by $15 a month. The first reaches the 12-month cap of $240 and the second $195, so $435 together instead of $315. ## What to do next To see what the help costs, [compare what a bookkeeper costs](/bookkeeping-cost). We're also setting up catch-up bookkeeping that brings your books up to date in your own QuickBooks or Xero file, at a fixed price for each month behind. It gets the numbers ready. It doesn't include making a VDP application for you. [Join the catch-up list](/offers/catch-up-bookkeeping?ref=vdp-guide) to hear when it opens. ## Sources 1. CRA, Changes to the Voluntary Disclosures Program, read 2026-10-19: from 1 October 2025, general relief for unprompted applications is 75% of interest and 100% of penalties; partial relief for prompted applications is 25% of interest and up to 100% of penalties. 2. CRA, GST/HST Memorandum 16-5-1, Voluntary Disclosures Program, read 2026-10-19: conditions (paragraph 8), ineligible cases (9), voluntary, unprompted and prompted, including a deadline to file and third-party information (14 to 18), protection from prosecution (20), authorized representative (23), disclosure of all errors (24), four years of documents (25), Form RC199 (22), where to submit (41), pre-disclosure discussion and phone lines (43). 3. CRA, GST/HST Memorandum 16-2, Penalties and Interest, read 2026-10-19: the failure-to-file penalty is 1% of the net tax owing plus 25% of that amount for each complete month overdue, to a maximum of 12 months; interest is compounded daily, on the total owing including any penalty outstanding (paragraphs 2 and 3). 4. CRA, RC4022 General Information for GST/HST Registrants, read 2026-10-19: liability arises on the earlier of the day you are paid and the day payment is due, usually the invoice date; GST/HST you were required to charge and didn't is still owed, in the period you should have charged it. 5. CRA, Where to keep your records, for how long, read 2026-10-19: keep records six years from the end of the last tax year they relate to; a GST/HST return more than six years overdue must still be filed. 6. CRA, Prescribed interest rates for October 1 to December 31, 2026, read 2026-10-19: the interest rate on overdue GST and HST remittances is 7%. 7. Government of BC, PST return guide, read 2026-10-19: returns and payment due on time "to avoid penalties, interest and loss of commission"; unfiled returns are "assessed for estimated PST due, plus penalty and interest". --- Published 2026-10-19. Web page: https://www.bookkeepingforsmallbusiness.com/cra-voluntary-disclosure-program