Failing to report income on your tax returns can lead to penalties and interest charges. If you know you have unreported income and are worried that the Canada Revenue Agency is about to knock at your door, you can use the Voluntary Disclosure Program (VDP) to come clean about it.
Once started, the VDP process provides protection from penalties and prosecution. It does not mean you will not have to pay tax on the unreported income, as you are still responsible for the taxes owing. Interest will not be waived unless it relates to taxation years more than three years old.
In order to use the VDP, your disclosure must be voluntary, complete and involve the application or potential application of at least one penalty. If you start exploring the VDP after the CRA has contacted you about unreported income, it is too late. The VDP is no longer an option once the CRA has initiated action against you.
If you need the VDP, you should complete an RC199 to use the program. And remember to include as much information as possible. The CRA can reject your application if it cannot process your request.