Most Canadians don’t really give much thought about what happens once they have filled their taxes with C.R.A. Besides issuing refunds or collecting owed amounts, there are a few steps in between that could impact you.
Pre-assessment review: right after you file, the deductions and credits you claim are reviewed to issue your Notice of Assessment and refund (if applicable). This happens from February to July and is a basic review.
Processing review program: similar to the pre-assessment review, except it takes place from August to December.
Matching program: This is a thorough review of your return. C.R.A. will compare what you filled with the information provided to them by your employer, banks, investment companies or charities. It usually happens between October and March. It may trigger a Notice of Reassessment and adjustments could be made to your RRSP limit or any benefit you are eligible for. It may also change the amount you owe or are owed.
For these 3 steps, it is unlikely C.R.A. will contact you.
Special assessment program, a.k.a. audit: This process can happen at any time, even for past returns. C.R.A. will send you a letter requiring additional documents or information.
If you are contacted, do not ignore the request. If you do, the agency will adjust your return based on their findings, and it won’t be in your favour. You may elect to consult a tax lawyer or an accountant.
There a few common reasons why you are audited:
- Random selection
- Discrepancies found during the matching program
- Past history and reviews
Tax payers are required to keep all returns, records and documents for 6 years.
The agency is aiming for efficiency. Usually audits target a specific group of people or industries, but sometimes it is just “your turn”.
In a nutshell, reviews are very common. My 2011 return was reviewed. I had to reimburse $ 20.00 for an error in the calculation of my CPP amount. The Agency did not contact me prior to issuing a Notice of Reassessment.