Every tax season, we have two options for filing our returns – paper-filing by mail, or e-filing online. In most cases, the method of choice is e-filing, with 88% of taxpayers filing online in 2018.
While filing online expedites the filing process and requires less review by Canada Revenue Agency (CRA), there is no paperwork that can be used to verify the authenticity of our claims.
As such, there is a greater possibility of misrepresentations. To offset this risk, the CRA conducts post-assessment reviews.
During this review process, the CRA requires taxpayers to validate their claim for self-assessed credits and deduction made on the return. If you are selected for a post-assessment, you will be reviewed under one of two programs - the Processing Review Program and the Matching Program.
Processing Review Program
The Processing Review Program starts in August and is a review of deductions and credits claimed by the taxpayer.
If assessed under this program, the taxpayer will be required to submit proof of credits and deduction by supplying receipts and any other documentation or forms that validates their 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.
Under the Processing Review Program, there are a number of 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.
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 that received by the other party, there will be no further steps taken. If there is a material discrepancy, the taxpayer will be contacted and required to explain the differences.
While being contacted by the CRA can be concerning, it is important to remain relaxed - if you have properly filed your return, nothing should happen because of the review process.
It is important, however, that you respond promptly to any correspondence by the CRA, as this will bring the review to a quick close and minimize a reassessment of a properly filed return.
For more information about the review process or help getting together the proper documentation to validate your return, contact us today.
