The CRA is reviewing my return: reviews, matching and audits explained

Canada’s tax system runs on self-assessment: you work out your own tax, and the CRA checks some returns afterwards. It runs review programs every year, and it stresses that having your return selected for review is not a tax audit.

Why returns get checked

Most returns are assessed without anyone looking at them by hand, so your notice of assessment arrives quickly. But every return is screened by the CRA’s computer systems and can be reviewed later. A return can be picked because:

• it doesn’t match information the CRA got from others, such as T4 slips
• of the kinds of deductions or credits claimed
• of your history of filing and paying
• at random

Filing on paper or online makes no difference to the chance of being selected.

The main kinds of review

• Pre-assessment review. The CRA checks a claim before it sends your notice of assessment.
• Processing review. The same kind of check, after your notice of assessment.
• Matching. After assessment, the CRA compares your return with information from employers, financial institutions and other third parties.
• Request verification. When you ask to change a return, the CRA checks that the change is allowed and supported before reassessing.
• Other reviews. Other programs check refunds, look more closely at some income, losses and deductions, or protect accounts from identity theft.

Answering a review letter

The CRA first tries to confirm your claim from what it already has. If it needs more, it contacts you or your authorized representative by phone or in writing. When you reply:

• Meet the deadline in the letter, and send your reply to the address it gives.
• Include the reference number from the top right corner of the letter.
• Send everything it asks for that applies to you. The CRA can also ask for proof other than official receipts, such as cancelled cheques or bank statements.
• Missing a receipt? Send a written explanation, or call the number at the bottom of the letter to explain.
• Need more time? Call the CRA. For most review letters the number is at the bottom of the letter; the CRA’s “Responding to us” page lists the numbers for matching-program letters.

Reviews happen at different times of the year, so if you move, update your address with the CRA right away. If you’ll be away for a while, you can authorize a representative to deal with the CRA for you.

Sending documents online

In My Account (or Represent a Client, for a representative), choose Submit documents, enter the case or reference number from your letter, attach your files and submit. Accepted formats include PDF, Word, Excel, plain text, and JPG or TIFF images. Keep the confirmation number you’re given. A “Service unavailable” message usually means a file is damaged or in a format the CRA doesn’t accept; save it again as a PDF or an image and retry.

If your claim is changed

If the CRA changes a claim after a review and you later find more documents, you can still send them: the CRA accepts new information and will look at the claim again. Its letter explains how.

What an audit involves

An audit is a closer look at your books and records. The CRA picks files based on a risk assessment, looking at things like how likely errors are and signs that someone isn’t meeting their obligations. If you run a business, the auditor can look at your business records as well as your personal ones.

• It starts with a call or letter from an auditor setting a date, time and place. Audit letters end with “Audit Division” and the auditor’s name. On-site audits usually happen at your home, business or representative’s office, and the auditor shows a valid ID card. Otherwise the audit runs from a CRA office, possibly outside your region, and you bring or send the documents.
• The auditor can look widely: business records such as ledgers, invoices, receipts, contracts and bank statements; personal records such as bank and credit card statements and mortgage documents; and records of related people or entities, such as a spouse, family members or your corporation.
• No email. Auditors aren’t allowed to accept records by email. They’ll tell you how to send them through the CRA’s secure online services.
• You must cooperate. Give the auditor all relevant paper and electronic records and answer questions fully and on time. Not providing required records is an offence. If records are lost, ask the bank or supplier for copies; if you can’t get them, the auditor or team leader will work with you on other ways to confirm the amounts.
• The proposal letter. If the auditor thinks your return should change, you get a letter explaining why, and you have 30 days to agree or disagree. If you disagree, tell the auditor why and send supporting documents. If that doesn’t settle it, contact the auditor’s team leader, whose details are in every letter.
• The final letter. The audit ends with no change, more tax to pay, or a refund. If you’ll owe more, the auditor can estimate the amount before the reassessment so you can pay early and limit interest.

Your rights

The Taxpayer Bill of Rights sets out 16 rights. Among them, you have the right to:

• be treated professionally, courteously and fairly, including when the CRA asks for information or audits you
• be represented by a person of your choice (you stay legally responsible for your taxes)
• a formal review and a later appeal
• not pay personal income tax amounts in dispute until the CRA has done an impartial review, unless the law provides otherwise (interest keeps running in the meantime)
• make a service complaint or ask for a formal review without fear of reprisal

If you disagree: file an objection

You can object to a notice of assessment, reassessment, determination or redetermination, but not to an auditor’s proposal letter or a statement of account. For individuals, the deadline is the later of:

• one year after the filing deadline for that return, or
• 90 days after the date on the notice.

If the dispute is about TFSA or RRSP contributions, the deadline is 90 days after the notice. Explain what you disagree with and why, with the facts and documents. You can file in My Account (“Register my formal dispute”), through your representative, or by mail or fax using Form T400A or a signed letter. If you missed the deadline because of circumstances beyond your control, or because you were trying to settle the issue with the CRA office that sent the notice, you can ask for an extension, up to one year after the deadline.

Send everything when it’s first asked for: information you only provide with an objection may be sent back for a second review.

What to do

• Check that a call or letter is real before sharing anything; see CRA scams.
• Note the deadline and reference number, send documents through My Account, and keep the confirmation number.
• Keep your records for at least six years; see keeping tax records.
• If you still disagree after a reassessment, object before the deadline.