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Canada: Revised CRA circular softens new restrictions on voluntary disclosure submissions

The Canada Revenue Agency (CRA) has made important changes to its voluntary disclosures scheme that addresses a number of taxpayer concerns ahead of the March implementation date.

On December 15, the CRA released the final version of Information Circular IC00-R6, which makes important changes to the CRA's Voluntary Disclosures Program (VDP). The final circular addresses certain problems identified by the tax community with the discussion draft released on June 9 2017 (see 'Canada: Sweeping changes proposed to voluntary disclosure programme', October 2017 issue), and postpones implementation of the new VDP (2018 VDP) to March 1 2018. Although the 2018 VDP is an improvement on what was proposed in the June 9 2017 discussion draft, the 2018 VDP represents a substantial restriction of the existing VDP Guidelines.

Under the 2018 VDP, certain disclosures will be eligible for substantially the same relief as is already available, whereas other disclosures will only be eligible for more limited relief (relief from criminal prosecution and gross negligence penalties) under a new 'Limited Program'. The June discussion draft was widely criticised for having imposed ambiguous and arbitrary criteria for limiting disclosures to Limited Program relief.

In particular, the discussion draft had provided that applications disclosing major non-compliance would be restricted to the Limited Program. It also listed specific circumstances that would automatically fall under the Limited Program, including large dollar amounts involved, disclosures involving sophisticated taxpayers, and other circumstances involving 'a high degree of taxpayer culpability'. The final 2018 VDP softens the general description of situations that will fall under the Limited Program to 'non-compliance where there is an element of intentional conduct on the part of the taxpayer or a closely related party', and describes large dollar amounts and taxpayer sophistication as factors that will be considered in identifying such non-compliance, rather than an automatic basis for relegation to the Limited Program. The reference to a high degree of taxpayer culpability from the discussion draft has been removed altogether.

The CRA has also retooled the blanket exclusion of large corporations and transfer pricing issues from VDP relief as set out in the discussion draft, stating instead that large corporations will generally be dealt with under the Limited Program, and that VDP applications dealing with transfer pricing issues will generally be referred to the Transfer Pricing Review Committee for consideration. These changes appear to be responsive to concerns which had been raised that the broad exclusions of the discussion draft would amount to an impermissible fettering of the discretion granted to the CRA under the Income Tax Act, which may have been susceptible to challenge by judicial review.

The VDP applications received by the CRA before March 1 2018 will be considered under the existing VDP rather than the new 2018 VDP. However, while the existing VDP allows for preliminary discussions with the CRA by disclosing information on a no-names basis, the CRA must receive a complete, named VDP application on or before February 28 2018 in order for the application to be dealt with under the existing VDP. Taxpayers considering disclosures that might fall under the Limited Program or be excluded altogether from relief under the 2018 VDP should consult their advisors quickly to determine whether they are able to access the benefits of the existing VDP while they are still available.


Andrew Spiro

Eric Brown

Andrew Spiro ( and Eric Brown (

Blake, Cassels & Graydon LLP

Tel: +1 416 863 3165 and +1 604 631 3326


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