I hope you are all enjoying the perfect summer weather we’ve been having.
Canada Revenue Agency started sending out review letters a couple weeks ago, so I figured this is a good time to give you some tips on responding to CRA reviews. Of course, if you just want nothing to do with the whole process, you can always get in touch with Empanda Tax to do it for you.
What is a CRA post-assessment review and why should I pay attention?
First off, receiving a CRA review letter doesn’t necessarily mean there’s anything wrong with your tax return. There are certain credits that CRA reviews more than others (like moving expenses, spousal support payments, the amount for eligible dependents), so if you claim one of those credits there’s a higher likelihood of a review. Maybe you claimed an unusually large amount and the size of the claim triggered a review. Or you could be chosen completely randomly. Whatever the reason, don’t take it personally!
When you get a post-assessment review letter, CRA has already processed your tax return, issued your refund, and calculated your benefits, like the Canada Child Benefit. The letter will tell you which claim they want to verify and what documents they would like you to send in. You will be given a deadline to respond, which is usually 30 days after the letter was addressed to you.
If you don’t respond to the letter, CRA assumes you cannot back up the claim and reassesses your tax return. They send out a Notice of Reassessment which tells you how much of your refund you have to pay back. They will also charge you interest (which at the moment is 9%) on the amount owing, applied retroactively to the tax filing deadline. If they disallow a deduction and your net income changes as a result, you may also need to pay back CCB, GST, or other benefit payments that were sent to you before the reassessment. CRA will also automatically review your return the next year, if you have the same claim on it again. This could be a big hassle if you have a recurring claim, like the amount for an eligible dependent.
General tips for responding to a review letter
Sometimes the list of required documents will have items that don’t apply to you or will specify that you send in one of multiple options. Read the letter carefully, so you don’t waste your time tracking down extra paperwork that CRA doesn’t need. There’s also no reason to give them extra information about yourself. They’re nosy enough as it is!
Make sure you don’t miss anything . Check off the documents on the letter as you track down each one.
Don’t lose the reference number from the review letter because this number needs to be included in your response.
If there’s a chance that any of your documents could be misunderstood, include an explanatory note. Don’t expect the CRA agent looking at your file to assume anything in your favour.
If your supporting documents include a receipt with multiple items on it, but only some of those items relate to your claim, highlight the relevant items and total them up for CRA.
Before you send anything in, ask us to take a look to make sure you have everything. If you are an Empanda Tax client, we don’t charge anything for providing a bit of guidance.
Submitting documents through My Account
If you have CRA My Account set up, you can submit your documents online. This is the best way to do it, because you get a confirmation number when CRA receives the documents.
The Submit Documents link on the left hand side of your My Account page will get you started and then it’s just a matter of following the directions.
Enter the reference number from the letter when asked for it.
Once you’ve submitted your documents you will get a confirmation page. Save this page for your records.
Submitting documents through mail or fax
Sometimes CRA will provide a fax number, but I don’t recommend using it to submit documents. There is no way to verify who received it on the other end, if every page went through legibly, or if it got correctly forwarded to the CRA agent assigned to your file. However, if you’re determined to use fax, please take a look at the tips below.
When mailing your documents to CRA use only the address on the review letter and, if you can, send your documents via registered mail, so you get a confirmation that they were received.
Don’t send valuable or irreplaceable original documents unless they ask for them. Send copies instead.
Write your SIN and the reference number from the review letter on the top of each page you send to CRA.
Number your pages, for example: 1 of 10; 2 of 10, etc.
Staple all your pages together, so nothing gets separated.
Okay, that was a long one!
I know it seems like a lot, but if you just work through the list and stay organised, you can do it!
If you just don’t have the time or if you’re not confident doing it yourself, please get in touch with us to do it for you. It’s much easier to respond to a review right away, so don’t ignore your correspondence from CRA.