That Little Brown Envelope from Canada Revenue Agency (CRA) Arrives

By Randall Orser | Personal Income Tax

Paying Tax TNThere comes a time in every businesses life when they get that little brown envelope from Canada Revenue Agency (CRA). It can be quite innocuous, or it could be a major issue coming. You’ll never know until you open it, and you shouldn’t ever not open it. We’ll discuss what that envelope could contain, and how to deal with it.

CRA has switched to a recycled, brown paper envelope quite come time ago, and most correspondence comes in these envelopes. The envelope could contain your notice of assessment for taxes, GST/HST, your current payroll remittance form, and it could also contain a letter about an upcoming audit or review. We’ll talk about this last one.

Canada’s tax system is based on self-assessment. As such, each year, the CRA conducts a number of review activities, or audits, that promote awareness of and compliance with the laws it administers. These reviews are an important part of the compliance activities we undertake in order to maintain the Canadian public’s confidence in as well as the integrity of the Canadian tax system.

There are a number of reasons why an income tax return may be selected in one of our review programs. These reasons include:

  • random selection;
  • comparison of information on returns to information received from third-party sources, such as T4 information slips;
  • types of deductions or credits claimed and an individual’s review history.

CRA’s review programs include the:

  • Pre-assessment Review Program;
  • Processing Review Program;
  • Matching Program;
  • Special Assessments Program.

Under these programs, we review various income amounts, federal and provincial/territorial deductions, and credits on individual income tax returns to ensure that amounts are reported correctly and that they are properly supported.

If your tax return has been selected for review by one of the above programs, CRA will first try to verify your claim based on the information you filed. If more information is needed, a representative from a tax centre will contact you or your authorized representative by telephone or in writing.

When responding to CRA’s request for more information, be sure to:

  • include the reference number found at the upper right corner of the letter;
  • send your reply and all requested documents to the address in the letter within the time frame indicated;
  • provide all receipts and/or other documents requested.

If your return has been selected for review by CRA’s Processing Review (PR) program, you or your authorized representative may send scanned documents to them electronically using My Account or Represent a Client. If receipts or documents needed to support your claim are not available, include a written explanation or call the number at the bottom of the letter to explain your situation.

If your claim has been adjusted after being reviewed by one of CRA’s programs and you have additional information or documents related to the claim, CRA will accept all new submissions and review your claim again for a possible adjustment. Send any additional information or documents to the address indicated in the letter or electronically.

When you get one of these brown envelopes, remain calm, open the letter and read the contents. If you used a tax preparer, let them know you have this letter, and send it to them. The next thing is to discuss what the letter wants, and gather all the information requested. The main thing is to be calm, and follow the instructions in the letter. And, don’t give CRA any more than they are requesting.

About the Author

Bookkeeper Extraordinaire Number Crunchers® Financial Services Learn how to just say stuff it to this bookkeeping thing with our 'Just Say: "Stuff It" To Bookkeeping program.