CRA Urges Canadian Taxpayers To Keep Records

by Mike Godfrey, for LawAndTax-News.com, Washington

10 April 2009

Canadians who plan to file their income tax and benefit returns electronically, or who do not file information slips and receipts with their paper-filed return, should keep their tax records on hand in case they are contacted by the Canada Revenue Agency (CRA).

After returns are filed, the CRA begins work to verify the income reported, as well as the credits and deductions claimed. These reviews are an important way that the CRA makes sure that Canadians are paying their taxes.

For the 2007 tax year, about 2.8 million individual returns were reviewed and an extra CAD889m (USD719m) in tax was assessed by the CRA.

Some of the first reviews of deductions and credits are done when returns are filed, and before taxpayers receive their notice of assessment. However, most reviews take place later in the year, as the CRA works to verify the information on an individual's return and compare it with the information provided by other parties, such as an employer, a spouse, or a common-law partner.

During this review process, the CRA may contact taxpayers to ask for more information on income sources or dependants, and may ask for copies of receipts or information slips to support claims, related to:

• medical expenses;
• charitable donations;
• child care expenses;
• spouse or child support payments; and
• moving expenses

The CRA has urged individuals to keep their records on hand to make it easier to respond to these requests. It will also help taxpayers to explain their tax and benefit situation to the CRA if they do not agree with their reassessment.

Further to this, the agency has explained the receiving a request for receipts or documentation does not mean an individual is being audited by the CRA. When an individual is selected for an audit, the CRA tells them that their tax and benefit situation is being reviewed and calls to arrange a meeting to begin the audit.

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