What You Need to Know About Tax Reviews

Today, Canada Revenue Agency (CRA) is doing more “reviews” than audits these days, though, let’s face it, it’s just a fancy new name for audit. CRA would have you believe that these reviews are just them ensuring that you’re paying your fair share of taxes, though that doesn’t make it any less stressful for you. Most taxpayers won’t have to worry about a tax review, however, if you are one of those worrying about such a review, here are some tips to make it a smoother process.

Tax Preparation

If you maintain accurate records over the year, your tax review should run smoothly, or you may avoid one completely. By keeping good records, you have ready access to the information you need to complete your tax return. Rather than putting it off until the end of the year, or worse, when you’re doing your taxes, keep pertinent receipts and documents in some kind of file, envelope, etc. By keeping them handy and in the same place, you won’t forget items that should go on your tax return.

Red Flags for Audit

There’s certain things that are more than likely to trigger a review than others; CRA also has years where it looks at certain things over others. By paying attention to what you are doing, you should be able to avoid some of these things:

• Incomplete tax forms

• Incorrect SIN for yourself or a dependent

• Information that doesn’t match your T-slips (T4, T5, T3, etc.).

• Large amounts for deductions in comparison to your income

• Consistent large business losses year over year

• Using non-standard deductions

• Unusual deductions that you’ve not taken before

• Listing dependents other than children, parents or grandparents

• Large amount of medical expenses or donations

You probably won’t have to go through a tax review every year, it can happen. Sometimes it can be as straightforward as remembering to follow the guidelines for completing your tax return, schedules, or to include certain types of expenditures or income. If you want to avoid a review then just complete your return as accurately as possible and keep your documents.