You’ve received a letter from the CRA requesting more information about your income tax return. Now what?
So tax season is over, right? Once you’ve filed your taxes you can clean out your tax folders and start fresh? Not so fast. The Canada Revenue Agency (CRA) usually processes tax returns within two to six weeks, however, all returns can be reviewed at a later date.
If you receive a letter from the CRA after filing your taxes, this does not mean that you are being audited. It may simply be a request for more information, which means that you have been selected for review. Why me, you ask?
Reasons for review
The CRA may select your income tax for review for a number of reasons. Sometimes, it’s as simple as a random selection. Other times it may be due to a conflict of information, between third-party sources, such as slips issued by your employer financial institution, or even your history of credits claimed and deducted. Another reason can be that the CRA noticed unusual claims or significant changes from your filing history. Note that how you file, whether online or in office, does not make a difference as to why you have been selected.
Types of Review
There are a couple of different types of review:
- Pre-assessment Review Program
The CRA conducts a review before processing your return and issuing a Notice of Assessment. The peak period for this program is between February and July.
- Processing Review Program
The CRA reviews your return after issuing a Notice of Assessment usually between August and December.
- Matching Program
This can take place before or after the Notice of Assessment is issued, where information from your tax return is compared to a third-party source (your employer or a financial institution).
- Special Assessments Program
This also takes place after the Notice of Assessment is issued. It is a more in-depth review, resulting from trends in non-compliance that have come to the attention of the CRA.
I’m being reviewed, now what?
In the event that you’re asked to provide additional information on your tax return, cooperate. If you ignore their request, the CRA can make adjustments as they see fit based on the information available to them, which might leave you with unwanted fees. In order to avoid the unnecessary hassle, respond to their request within the specified time frame (usually 30 days) of receiving your notice. To respond, you must include your reference number (located at the top right corner of their letter to you) and provide all of the information requested.
As concerning as it may seem to receive a letter from the CRA requesting additional information, it’s quite common. Don’t stress! As long as you keep your legitimate receipts, slips and letters organized, you won’t need to scramble. This process is as fast and simple as you make it.
Should you have any questions about the review process, H&R Block Tax Experts are always available to discuss these with you. For more information, visit one of H&R Block’s offices or online at www.hrblock.ca.