If the Canada Revenue Agency (CRA) tells you it’s reviewing one or more of your tax returns, don’t panic! In most cases, it’s simply a routine check.
What is a review of your tax return?
The first thing you should know is a review is not an audit.
If the CRA tells you that your tax return is being reviewed, it is simply to ensure that the amounts you have claimed are reported accurately. It might also be because some documents are required to support your claim. It’s important to respond promptly to the information request or to call the number shown on the letter as soon as possible since there is a time limit involved.
Why is the CRA reviewing your tax return?
The Canadian tax system is based on self-assessment. You don’t usually need to include your documents when you file your tax return.
However, from time to time, the CRA will contact individuals under one of its review programs. This is part of the CRA’s efforts to ensure the integrity of the tax system.
Make sure you give the CRA the requested documents as soon as possible so it can do its review quickly and easily.
How long do you have to keep your records?
Keep all your tax documents for at least six years from the date you file your tax return. If you claimed expenses, deductions, or tax credits, make sure you keep all your receipts and related documents in case the CRA asks to see them.
What will happen after your review?
The CRA will let you know the result of your review in writing, either in a letter or on a notice of assessment or reassessment. If after the review you owe more tax, you should pay the amount owing in full as quickly as possible. If you can’t pay the full amount right away, the CRA can work with you to set up a payment arrangement. The sooner you take action, the better. This is because the CRA will charge interest on any outstanding balance. To make a payment arrangement, go to pay by pre-authorized debit or contact the CRA.
Remember: protect yourself against fraud
If the CRA selects your tax return for review, it will send you a letter on official letterhead or call you.
The CRA does not and will never do any of the following:
- send or ask for payment by e-transfer
- use aggressive language and threaten you with arrest or police action
- ask for payment by prepaid card
- leave any of your personal information on your answering machine
If you would like more information on navigating the review process, contact GB Pilley & Associates Ltd., Chartered Professional Accountants at 604 926 3522.