Facts you should know if your tax return is reviewed
Are you aware of tax reviews? Following the submission of your tax return, it is possible that the Canada Review Agency (CRA) may contact you for a tax review. This is not the same as a Tax audit. But if your response is not satisfactory then it might lead to a tax audit.
3 Types of Tax reviews
- Pre-Assessment Review
Following the submission of your tax return, the CRA may decide to review the deductions and credits you have claimed. These usually happen in the months between February and July.
- Processing review program
This is similar to the Pre-assessment review. But the timing may differ. This usually happens between the months of June and November. The CRA usually sends notices after having sent you a notice of assessment.
- Matching program
Under this review, the CRA compares the information on your tax return with information provided by the 3rd Parties like your employer, banks, etc. It usually takes place between the months of September and March.
It has been observed that generally returns are selected at random for reviews. But the CRA may also choose your returns for reviews in case
- there is a mismatch between information submitted you in the returns with those of the 3rd parties such as the T 4 slips provided by your employer
- There are unusual changes in your tax return in comparison to the previous years.
- If the CRA had objected to the type of deductions or credits claimed even if that happened in the past.
One of the best ways to handle tax reviews is by maintaining the records of the previous years in a very organized manner. However, apart from this the following are the 5 simple ways to handle tax reviews smoothly
- Sending your response within the time frame provided. This is usually 30 days from the date of the letter sent to you for the review.
- Best to include all Supporting information and documents with your reply. This will make it easier for the authority to easily find out the facts. You would be spared of the need to send in more correspondence and documents later to speed up the process.
- In the case of documents missing explain the reason clearly. While preparing your reply it is possible that you may not be able to furnish certain documents asked for. In such a case to prevent any future problems it is best that you state clearly why you are unable to furnish what is being asked for.
- Always mention the reference number of your case in all the correspondences you make with the CRA. This will enable them to find out to quickly match the information being provided by you.
- Maintain a record of your correspondence with the CRA. You must maintain a proper record of the correspondences being made with the CRA. These would include details like dates, Agent ID number, etc.
In conclusion, we hope we have been able to provide you with a fair idea about the process of Tax reviews and how to effectively deal with them if you should face one. We are one of the best experts in matters relating to Consultancy of Taxation and Accounting in Canada and USA. For any assistance in this matters please get in touch with us.
