Most taxpayers are now filing their tax returns online. While this is convenient for taxpayers it means that the Canada Revenue Agency (CRA) doesn’t receive the paperwork to back up the returns being filed.
For this reason, the CRA conducts post-assessment review to verify the validity of returns, offset risks and catch any mistakes, whether accidental or purposeful.
There are two programs that your tax return may be reviewed under:
Processing Review Program
The Processing Review Program starts in August and is a review of deductions and credits claimed by the taxpayer.
Under the Processing Review Program, there are several reasons why the CRA may select your return, including but not limited to:
- Your return contains claims in areas where taxpayers are more likely to make errors (e.g. medical, support payments, legal fees)
- Your deduction or credit is significantly different from that claimed in previous years
- You have been reviewed before, and adjustments were made
- You were randomly selected
If assessed under this program, you will be required to submit proof of credits and deduction by supplying receipts and any other documentation or forms that validate your claim.
As there is no way to verify a taxpayer’s claim without seeing the required documentation, being contacted by the CRA under this program does not necessarily mean you have done something wrong or that changes will be made to your return.
It simply means that the CRA wants to verify that you have not unintentionally (or in some cases intentionally) provided incorrect information.
Matching Program
The Matching program matches information reported in your tax return with that submitted by other sources, such as their employers and financial institutes.
If, during their initial review, the information provided by the taxpayer matches the information received by the other party, there will be no further steps taken. If there is a material discrepancy, you will be contacted and required to explain the differences.
While being contacted by the CRA can be concerning, it’s important to remain relaxed - if you have properly filed your return, nothing should happen because of the review process.
But you do need to respond promptly to any correspondence by the CRA. This will bring the review to a quick close and minimize a reassessment of a properly filed return.
If you would like someone to work with the CRA on your behalf to resolve any issues, you will need to authorize a representative.
This is because the tax affairs of an individual or business are confidential and therefore protected. The only way that a third party, including family, employees, or tax/accounting professionals, can obtain information regarding your tax information is for you to give them access.
To do so, you must fill out form T1013(E), Authorizing or Cancelling a Representative and file it with the CRA. This form can be filled out and mailed to the CRA or you can register a representative online using My Account.
When filing a T1013(E), it’s important to review it carefully. While your tax preparer or accountant needs access to information regarding your taxes, you must always remember that the consequences of granting access to your private tax information can be more extensive than one may presume.
Choosing the Right Level of Access
Firstly, you want to consider the purpose for giving your tax professional access to your information so that you can select the appropriate level of access.
There are two levels of access that can be given to a representative.
Level 1 gives your representative the right to obtain information. Specifically, the Canada Revenue Agency (CRA) can provide a Level 1 representative with the following information.
- Information on your income tax return
- Adjustments made to the return
- Information regarding RRSPs (Registered Retirement Savings Plans) and the Home Buyers’ Plan
- Information regarding TFSAs (Tax Free Savings Accounts)
- Information regarding LLPs (Lifelong Learning Plans)
- Tax Account Balances
- Payments on Filing
- Installment Payments and transfers
- Information about benefits and credits
- Marital status
Representatives with Level 2 Authorization, on the other hand, not only have the ability to obtain this information but also make changes to tax accounts on your behalf. This means they can:
- Effect accounting transfers
- Request adjustments on income, deductions, and non-refundable credits
- Obtain personalized remittance forms, such as those used for GST remittances
- Request relief on behalf of the taxpayer through the Tax Relief Program
- File a Notice of Objection or Notice of Appeal
A representative is never, no matter the level, able to make changes to your address, marital status, or direct deposit information. They also cannot make changes to representatives on file nor can they get information about your children or apply for child benefits.
Deciding Who Will Have Access and For How Long
In addition to deciding the level of access your representative will have, you also need to consider how your representative will be able to contact the CRA on your behalf and for how long.
Part II, Section B will give your representative permission to contact the CRA by phone, in writing or in person, where as Section A will grant them permission to access information by phone, writing, in person or online.
While you can limit the length of access in Section B, granting your representative online access along with access through other means using Section A, gives them access for an unlimited period of time, or until you remove them as a representative.
Giving Access to a Company or an Individual
Lastly, you must decide whether you are granting access to an individual or a company. If you grant access to an individual, only that one person can access your information. On the other hand, if you grant access to a business, everyone employed by that business will have access to your tax information.
Understanding the options available to you when authorizing a representative and understanding what you are agreeing to is critical, because, even at the lowest level, you are granting your tax preparer access to substantial personal and financial information.
For more information on authorizing a representative, or to have our team help with the submission of tax documents, contact us today.
If you are being reviewed by the CRA under the Matching Program or the Processing Review Program, feel free to reach out to our team. We would be happy to help you submit the necessary paperwork and work directly with the CRA on your behalf.
