What to Do If the CRA Reviews Your Tax Return

A letter from the Canada Revenue Agency (CRA) asking for receipts is common, and in most cases it's routine. The CRA checks a share of returns every year to confirm that amounts are reported correctly and can be supported. The CRA's own page on reviews states plainly that being selected for review does not represent a tax audit.

This guide explains what the CRA publishes about reviews, how replies work, and where your rights to disagree begin. It is general information. The letter you received, and the dates printed on it, are what govern your situation.

Which kind of review is it?

The CRA runs several review programs. Its types of reviews page describes them this way:

• Pre-assessment review: happens before the notice of assessment is issued.
• Processing review: similar, but it happens after the notice of assessment has been issued.
• Matching program: compares your return with information from third parties, such as employers and financial institutions. A slip left off the return is a typical example.
• Request verification: checks a change you asked for, before the CRA issues a notice of reassessment.
• Other programs, including refund examinations, supplementary examinations, special assessments and identity protection reviews, which can happen before or after an assessment.

An audit is a different and usually more detailed examination of books and records. If your letter says audit, the process and the people involved differ from what's described here, and it's worth getting help early.

Why a return gets picked

The CRA's selection page lists four reasons: information that doesn't match what third parties reported, such as T4 slips; the kinds of deductions or credits claimed; your compliance history; and random selection. Being chosen doesn't mean the CRA thinks anything is wrong.

Before anything else, confirm the letter is real

CRA-themed scams are common enough that the CRA keeps a page on recognizing them. It says the CRA does contact people by letter, phone and, in limited cases, email, and that it may ask for receipts or supporting documents during a review. It also lists what it will never do, including:

• Demand immediate payment by e-transfer, cryptocurrency, prepaid card or gift card.
• Threaten arrest, deportation or prison.
• Ask for personal or financial information in a voicemail or email, or send an email with a link for entering it.
• Contact you through WhatsApp or Facebook Messenger.

The CRA's suggestion is to sign in to your CRA account yourself to see whether the letter appears there, and to call a number you looked up on Canada.ca rather than one supplied in a suspicious message.

Read the letter for three things

1. The date to reply by. The CRA's responding page asks for a reply within the time frame the letter gives. Write that date somewhere you'll see it.
2. The reference number. It's in the upper right corner of the letter, and it's how your documents reach the right file.
3. Exactly what's being asked for. Letters usually name a tax year and a line or claim, such as medical expenses, child care, moving costs or a donation. Answer that question, not a different one.

Pulling together the documents

The CRA asks for all receipts or other documents requested that apply to your situation. Where a receipt is missing, its guidance is to include a written explanation or call the number on the letter. A few habits help:

• Send copies and keep the originals.
• Match each document to the claim it supports, so the reviewer doesn't have to guess.
• Include proof of payment where a receipt alone doesn't show it, such as a bank statement or cancelled cheque.
• Keep a copy of everything you send, together with the letter.

If your records are thin, our checklist of what to bring for a tax return shows the kinds of records the CRA expects people to keep for six years.

Sending documents online

The CRA's document submission page describes uploading through My Account for Individuals (or Represent a Client, for a representative):

1. Sign in and select Submit documents.
2. Enter the tax year and the reference number from the letter, without spaces.
3. Attach each scanned file and describe what it contains. The CRA allows up to 10 files and 150 MB per submission, and suggests file names that include the line number.
4. Review the details, select Confirm, and keep the confirmation number.

Questions about the letter itself, including asking for more time, go to the telephone number printed at the bottom of the letter, which is what the CRA's responding page directs.

Having someone deal with the CRA for you

You can authorize a representative to talk to the CRA about your return. For personal accounts, the CRA's access page offers Level 1 (access to information only) and Level 2 (access to information plus certain account changes). For a representative to upload documents in a review, the CRA's submission page says they need a RepID from Represent a Client and Level 2 authorization. The CRA's Form AUT-01 is titled Authorize a Representative for Offline Access, which covers dealings outside the online services.

What happens after you reply

The CRA looks at what you sent and either accepts the claim as filed or adjusts it. If it changes something, you'll receive a notice of reassessment explaining the new amounts. If the claim was reduced and you later find more support, the CRA says it will review new submissions; its submission page notes that additional information can be sent online if less than three years have passed since the notice of reassessment for that year. Letting the reply date pass leaves the CRA to decide with only the information it already has.

If you disagree: filing an objection

A formal objection is the next step when a reassessment looks wrong and talking it through hasn't resolved it. The CRA's objections decision tree gives individuals whichever is later of two deadlines: one year after the filing deadline for the return (April 30, or June 15 for the self-employed), or 90 days after the date on the notice of reassessment. Some assessments, such as loss determinations and RRSP or TFSA over-contribution assessments, have a 90-day limit only.

According to the CRA's P148 publication, an objection can be filed online in My Account using Register my formal dispute, through Represent a Client, on Form T400A, or by signed letter to the Chief of Appeals. The CRA normally holds off collecting a disputed amount until 90 days after it sends its decision, though interest generally keeps running. A late objection can be the subject of an extension request, made no later than one year after the original deadline.

How far back can the CRA go?

People who search for how far back the CRA can audit are usually asking about the normal reassessment period. For individuals, the CRA's Income Tax Audit Manual puts it at three years from the mailing date of the original notice of assessment for that year. The manual lists exceptions that allow a later reassessment, such as a misrepresentation attributable to neglect, carelessness or wilful default, or a waiver the taxpayer filed. The CRA's six-year record-keeping guidance sits alongside these rules.

How Infoetax helps when a CRA letter arrives

CRA audit assistance is one of the services Infoetax offers from Queenston Road in Hamilton: dealing with CRA correspondence, preparing for an audit, organizing documents and guidance through the review process. In practice, we organize and review your documents, and we help you understand what the CRA is asking for before anything is sent. The CRA audit assistance page has more detail.

If a review letter has just landed, bring it and the return it refers to. You can email a description of the letter to ravi@infoetax.ca, phone 905-393-7664 during weekday office hours, or start with the consultation request.