Types of Canada Revenue Agency Reviews/Audits
“I have been audited so many times” or “I get audited every year” are statements I have heard numerous times from clients, prospective clients, and others alike but in reality, very few people are actually audited every year.
The Canada Revenue Agency has many review and audit programs to flush out problems with tax returns filed by taxpayers. These programs are used to ensure confidence in our self-assessment tax system and to make sure we are all paying our fair share of taxes because the CRA does not receive all the documents that can be used to verify your tax return. These documents can include child care, donation, and medical receipts.
The most common reviews that we deal with are the pre- and post-assessment reviews, as well as matching reviews, which I will briefly touch on in this writing.
Pre-assessment Review
This is a review before your taxes are assessed, and will cause delays to your tax return being assessed by many weeks.
These are triggered quite often when you have claimed significant refunds due to business or rental losses, but can also be triggered for other reasons such as employment expenses, donations, and medical claims.
(Processing) Post-Assessment Review
Processing or Post-Assessment reviews are generally conducted in the Summer and early Fall but can be conducted anytime after you file your taxes, but within the statute barred limitation period (3 years after the notice of assessment has been issued.)
These reviews are conducted on tax returns that typically have higher than average expenses where the CRA does not receive the supporting documentation from third-party sources such as employers, banks, and investment firms. Some of these post-assessment reviews could consist of a review of receipts for donations, medical, tuition, employment expenses, and child care expenses, but can also be covered in relation to foreign tax credits and/or foreign property that is owned.
Matching Program
This program is conducted after your taxes have been assessed and is quite often started in the later Fall and early Winter seasons, after other review programs.
Matching is where the CRA compares the information you have filed on your return to information supplied by third parties, such as your employer and financial institutions. Quite often, issues related to matching are because of errors between what your employer has claimed on the T4 slip vs what you have entered on the tax return. This could also be triggered if your employer or other third-party sources haven’t submitted the necessary forms to the CRA.
If you end up with one of these reviews, or others that are not mentioned above, please don’t hesitate to contact us and we would be happy to assist you with navigating these situations.
With 20 years and counting of industry experience working in the field of accounting and taxation, Shawn P. Stemmler brings a depth of knowledge in government legislation including the Income Tax Act, Excise Tax Act, Employment Standards Act, and more to the table when serving our clients.
Shawn’s addition to the Premier Professional Accountants team in 2021 has been a welcomed addition for our clients. He’s quickly put his tax compliance knowledge to great use in helping clients navigate relationships with his existing client base and the clients of Premier Professional Accountants Inc.
