All You Need to Know About CRA Tax Return Reviews

CRA is an abbreviation for Canada Revenue Agency is responsible for administering tax laws of the country and many provinces and territories. It also executes several different social and economic incentive programs that are delivered through self assessed tax system.

 

CRA conducts reviews of tax returns each year and sees common mistakes made by the people. This is to ensure that they comply with the tax laws of the country. This activity helps the agency correct misunderstanding among the people and to enhance information provided to the citizens.

 

In addition to CRA, business owners may also seek guidance from Canadian tax law firm to understand tax procedures, as well as the latest reforms introduced by federal and provincial governments. They are more helpful when business owners are instructed to clear their tax dues and they have not enough resources to clear them. If you’re going through this problem, CRA consultant Canada will negotiate a proper payment plan for you.

 

These lines focus on the review process, the kinds of reviews and tips to respond to CRA tax review.

 

How CRA Chooses Tax Return for Review

There are four ways CRA selects tax returns for review:

  1. It chooses them randomly
  2. It compares tax returns from different information sources
  3. It chooses tax returns according to deductions and tax credits claimed
  4. It chooses tax returns based on review history of particular individual

 

Types of Reviews

Depending upon the time of the year, these reviews are classified into four categories:

 

  1. Pre-assessment Review: This review may take place between February and July. The review is done before CRA issues a notice of assessment to the individuals.

 

  1. Processing Review: When the notice of assessment is sent, CRA reviews again. The best time of these reviews is in the month of August.

 

  1. Matching Program: this program is conducted after sending Notice of Assessment. In these reviews, CRA compares and matches information mentioned in tax returns from other information sources, such as T4 forms and tax information slips. These reviews take place between October and March.

It is important to know what benefits are available for individuals with matching program:

  • Correction of net income mentioned by individuals
  • Correction of errors in RRSP deduction limit of the tax payer
  • Correction of errors in spouse-related claims
  • Correction in tax credits and tax deductions

This program also offers beneficial client adjustments by identifying under-claimed credit related to tax deducted at source. After adjustments, CRA issues Notice of Reassessment.

 

  1. Special Assessments: These reviews are conducted on both occasions, before and after Reassessment Notice. On both occasions trends and non-compliances are monitored and the agency sends requests for information to the people.

 

Responding to Tax Review

You may need a tax law lawyer Canada to help you respond to the review in a better way.

  • Be sure to include the reference number. It is available on the upper right corner.
  • Answer the review within the time specified in the letter.
  • Provide all documents and receipts as requested.
  • If you lack any document, include a letter of explanation or call the agency. The number is available at the bottom.