CRA Reviews – Is the CRA Picking on Me?

Yet another letter has arrived from Canada Revenue Agency asking for more details on one tiny item included in your taxes this year. This may leave you wondering, is this normal?  Or does CRA have it out for me? While it can certainly feel like you are always being picked on, the audit or review projects that CRA undertake impact many Canadians every year.

Read on to find out how CRA reviews may affect you as an individual, or as a corporation.

Individuals

For individuals, after you submit your tax return, CRA has a number of review programs that it may undertake on your tax return.

Pre-assessment Review Program

These reviews occur before CRA even issues a notice of assessment.  If they see something odd going on in your return, they want to review that information before any refund is issued.

Some of the items that can cause this problem are employment expenses, non-business foreign taxes or other deductions.  These items are not typical on a return, so if you are reporting them – expect a letter from CRA asking for the support to back up your claims. .

Processing Review Program

You’ve received a notice of assessment and your refund has been deposited.  Everything is good for another year, right? Not quite! CRA may still come calling to look at specific items on your tax return.

Common areas that CRA examines after the fact include medical expenses and donations, to name a few.  These items are typically more common, but the amount may be larger than usual, hence a review.

Matching Program

You might already be getting ready for your next tax year when CRA gets around to this stage of the game.  Perhaps you filed your return before you received all your tax slips, your employer didn’t file the T4 that was issued to you this year, or CRA hasn’t yet processed that amendment to your T4.

Anytime CRA sees a slip it can’t find on your return or that doesn’t match their records, you run the risk that it will be flagged during the “matching” process. While this can feel like a bit of a hassle, it is usually resolved quite quickly by simply supplying the required information or documents.

 

You’ve received a notice of assessment and your refund has been deposited.  Everything is good for another year, right? Not quite! CRA may still come calling to look at specific items on your tax return.

 

Corporations

Every year or so, CRA seems to pick a particular expense or item on the corporate tax return that they want to examine.  Over the last two years, a number of audit projects have been undertaken including a review of professional fees, class 10 vehicle additions, and vehicle expenses.

Often these projects will go back a number of years to capture those tax years that are about to become “statute barred” (the time when CRA can no longer reassess a return unless negligence is found).  With this in mind, don’t be surprised if you receive a request for information on your vehicle expenses for the 2016 and 2017 year-ends.

While it would make sense that CRA is choosing returns that have higher than normal amounts reported, our experience shows this isn’t always the case.  Anyone can be selected for a CRA review, regardless of how much they pay in professional fees or the industry they are in.

 

So no, CRA is not picking on you, no matter how much it may feel that way. If you are selected for a review, give us a call! We are here to help and make sure it all adds up for you.

 

Book an appointment online with us today. Free consultations are always available for new clients.

 

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