A seller who under-reported marketplace income, never registered for GST/HST after crossing the $30,000 threshold, or simply never filed once the store started generating real revenue, often assumes the fix is to just get current going forward. CRA’s Voluntary Disclosures Program (VDP) exists for the years already behind, and it can meaningfully reduce penalties and interest on them, but only if the disclosure genuinely comes first: before CRA contacts the seller, audits the account, or receives a matching tip. Given that Canadian marketplaces now report seller sales and payout data directly to the CRA, that window is narrower than it looks.
What the VDP Actually Covers
The VDP, under Information Circular IC00-1R7, covers most of what an e-commerce seller can get wrong across several years: unfiled returns, unreported sales income, ineligible expenses already claimed, unremitted payroll source deductions, and GST/HST that was never charged, collected, remitted, or reported at all. It applies to personal and corporate income tax and to GST/HST as separate applications, each assessed on its own facts.
Relief means CRA will not refer the file for criminal prosecution and will generally reduce penalties and a portion of the interest that would otherwise apply. It does not mean the underlying tax owing disappears. Every dollar of tax that should have been remitted still has to be paid; the program’s benefit is on the penalty and interest side, not the principal.
The Framework That Took Effect October 1, 2025
CRA’s current VDP structure, replacing the older General and Limited Program distinction, sorts applications into unprompted and prompted categories:
- Unprompted applications — the disclosure genuinely originates with the taxpayer, with no CRA compliance action, audit, or third-party tip pointing at the same issue — receive 100% penalty relief and 75% interest relief.
- Prompted applications — filed after some signal exists that CRA may already be looking (without a full audit already underway) — generally still receive up to 100% penalty relief but only 25% interest relief.
Relief applies to the 10 most recent years before the disclosure; older periods can still be disclosed but relief on them is reduced. In both categories, the seller still pays 100% of the tax owing for every period disclosed.
Why “Unprompted” Is Getting Harder to Establish
The unprompted/prompted line matters more for e-commerce sellers than it did before digital platform reporting rules took effect, because the reason unprompted status exists is that CRA has no independent line on the issue yet. A seller on Amazon, Etsy, or another qualifying platform no longer fits that description as cleanly: the platform has already reported the seller’s sales activity to CRA under the digital platform reporting rules, whether or not CRA has yet matched that data against the seller’s filed returns.
Having reported data sitting in CRA’s system is not the same as CRA having contacted the seller, and a disclosure filed before any actual compliance action, audit, or tip is still generally treated as unprompted. But the data is there, on file, waiting to be reconciled against what the seller actually reported. The gap between “not yet actioned” and “prompted” narrows every filing season CRA runs matching against platform-reported figures, which is the opposite of the delay a seller waiting to disclose is often counting on.
Eligibility Conditions
A VDP application has to meet several conditions to be accepted at all:
- Voluntary — filed before CRA initiates any enforcement action, audit, or request related to the same issue, and before CRA receives a tip or other information pointing at the same non-compliance
- Complete — full and accurate, covering all relevant years and all issues known to the applicant, not a partial disclosure of the smaller problem while omitting a larger one
- Involves a penalty — there has to be an actual penalty that would otherwise apply, such as failure to file, failure to remit, or a gross negligence penalty exposure
- At least one year past due, for income tax filings (GST/HST periods generally follow a related but separate late-filing standard)
Missing any one of these disqualifies the application outright, which is why a disclosure assembled quickly and incompletely, just to get something filed before a suspected CRA letter arrives, can fail on completeness even when the underlying facts would otherwise have qualified.
GST/HST Disclosures Are a Separate Application
An e-commerce seller who never registered for GST/HST after crossing the small supplier threshold, or who registered but stopped filing, typically has both an income tax exposure and a GST/HST exposure running on different clocks. These are handled as separate VDP applications, and the eligibility and completeness standards apply independently to each. A seller correcting years of unreported Shopify or Amazon revenue for income tax purposes still needs a parallel GST/HST disclosure if registration and collection were also missed, covered in more detail in the GST/HST registration timing guide.
What a Disclosure Requires to Be Complete
For an e-commerce seller specifically, a complete VDP submission generally needs:
- payout history reconstructed from each platform’s transaction reports, not just bank deposits, since the deposit figure is already net of fees
- a determination of when the GST/HST small supplier threshold was actually crossed, which sets the registration and collection start date
- corrected income figures for every year being disclosed, tying platform-reported sales to what was (or wasn’t) reported on filed returns
- any expenses claimed in the same years that also need correction, since the disclosure has to be complete, not limited to the income side alone
Sellers who have not reconstructed platform transaction history before starting the disclosure often discover, partway through, that the actual exposure is larger or spans more years than the return they’d planned to correct, which is a reason to do that reconstruction first rather than filing an application based on an incomplete picture of what’s owed.
Scope of This Guide
This guide covers the VDP eligibility framework as it applies to marketplace sellers with unreported income or unregistered GST/HST. It does not cover the mechanics of filing the disclosure itself, provincial equivalents such as Revenu Québec’s disclosure program for QST, or how to reconstruct multi-year platform transaction history, which depends on the specific platforms and payout structures involved.
Related Guides
- Digital Platform Reporting Rules and CRA Seller Income Verification covers what data CRA already receives directly from marketplaces.
- GST/HST Registration Timing and the $30,000 Small Supplier Threshold covers how the registration start date is determined for a GST/HST-side disclosure.
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