Barry Choi: What to do if the CRA asks for more information

A follow-up letter is not always cause for concern

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You filed your taxes on time and are expecting a refund. Instead, the Canada Revenue Agency (CRA) is contacting you to clarify certain details regarding your return. There is no reason to panic. The CRA contacts people occasionally for more information and things can be clarified quickly, if you are ready.

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Why is the CRA reaching out?

The CRA may contact individuals for any reason. In most cases, they may want more details about an item you claimed when you return, including:

  • Medical fees
  • Capital gains on disposition of real estate
  • Steady losses in self-employment income
  • Vehicle costs
  • Foreign tax credits
  • Important changes to your deposit history

The CRA is generally looking for documents that will verify your claims. For example, if you claimed unusually high medical expenses, they may want you to provide itemized receipts.

Check that it is the CRA who is contacting you

In most cases, the CRA will contact you by sending you a formal letter when they ask you for additional information. They can also call you or send you a secure message directly to your CRA online account.

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That said, fraudsters can contact you by phone pretending to be a CRA agent. Here are some things to consider before providing information:

  • A legitimate CRA agent will provide their name, number, and office location. With this information, you can contact the CRA directly to verify the person’s identity.
  • CRA agents will not use aggressive language or force you to make quick decisions.
  • ARC does not request payments in cryptocurrency, prepaid credit cards or gift cards.
  • The CRA will never ask you questions unrelated to your tax return, such as your credit card information.
  • CRA agents will never offer to apply for benefits on your behalf.

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Respond to CRA

Once you have verified the authenticity of the application, you can gather the required documents. The letter will usually outline exactly what you need to provide. You will also want to note the reference number (included in your letter), the date you are due to respond, and the office handling this request.

Before sending your documents, make copies so that you can keep them for your own records.

Once you are ready to submit your documents, you have the following options:

  • Log in to your CRA online account and upload all of your documents.
  • Send the documents by standard mail. Be sure to include a cover letter stating your reference number and any other pertinent details.
  • Fax your documents. The fax number should have been provided in the request letter.

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When you download files online, you get a confirmation number: keep this number for your records. If there was a problem with any of the files or documents received, the CRA may ask you to resubmit them.

Keep all your records in one folder

Since there is no way to know what information the CRA may request, you should keep all of your records, or at least have access to them, for at least six years after the relevant tax year.

This six-year rule would apply to all your tax documents, not just expenses. In other words, keep all your income statements, receipts, and any other relevant documents. It is always possible that the CRA will ask you to review or verify your taxes later. Having all your documents in one place will ensure you are prepared.

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What happens if you don’t answer

If you choose to ignore the request for additional information or forget to respond, the CRA may reassess your tax return. This could result in taxes owing, penalties and interest payments. Additionally, your tax return may be flagged for further review, such as an audit.

If you have filed your tax return honestly, there is no reason to fear the demands of the CRA. All they are looking for are details, especially if there has been a major change in your income or expenses. Most of the time, when you provide the supporting documents, you won’t hear from the CRA until you receive your notice of assessment.

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

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