What if I have unfiled tax returns and want to sell my business?

Unfiled returns can be corporate, personal, GST/HST or payroll, and a sale puts a date on fixing them. This page explains the CRA’s Voluntary Disclosures Program and the order of steps to discuss with an accountant. It does not say whether you should apply. For the wider tax preparation, see the seller tax readiness checklist.

Why a buyer’s review reaches your filings

BDC says buyers ask to see a seller’s historic and interim financial statements, tax returns and other records, and that unaddressed issues complicate a sale. BDC’s due diligence guide for buyers lists tax returns and tax liabilities among the items to check, and asks whether the tax returns match the financial statements. A buyer checking those items would be looking at the filings. How any gap affects price or terms is a matter for negotiation.

What the Voluntary Disclosures Program is

The CRA says the program grants relief, case by case, to taxpayers and registrants who come forward to fix errors or omissions in their filings. It changed effective October 1, 2025: circular IC00-1R7 applies to applications received on or after that date, and earlier applications fall under IC00-1R6. If relief is granted, the CRA says a taxpayer may receive some penalty and interest relief and will not be referred for criminal prosecution. Applicants use Form RC199. The CRA says the program conducts limited-scope reviews and determines eligibility for penalty and interest relief only, and that payment, or a request for a payment arrangement, of the estimated tax owing, if it applies, is part of an application.

Conditions the CRA sets

The application must be voluntary. The CRA says it is not if an audit or investigation has been started against the taxpayer or a related taxpayer on the information being disclosed, including one by a law enforcement agency, a securities commission, or another federally or provincially regulated authority. It also separates unprompted applications from prompted ones, for example after communication about an identified compliance issue, and the two get different relief. The CRA also requires payment of the estimated tax owing, or a request for a payment arrangement, if that applies.

Steps to discuss with an accountant

1. List every unfiled return and account: corporate, personal, GST/HST and payroll.
2. Say whether any CRA letter or notice about those filings has arrived, since it bears on whether an application is voluntary.
3. Ask about the CRA’s anonymous pre-disclosure discussion, which the CRA offers to taxpayers unsure whether to apply.
4. Gather records, prepare the returns and estimate the tax owing.
5. Ask how an application, the payment and the timing fit with the sale.
6. Ask your lawyer how and when to describe the position to a buyer.