We’ve filed a large number of personal tax returns in the last few months, and customers for the most part have received their Notices of Assessments. But something else could be coming in one of those brown envelopes in the next few weeks – a request from the CRA for documentation or additional information. So whether the demand relates to personal or business taxes – know your rights.
Usually at this time of year Canada Revenue Agency (CRA) is looking for receipts to substantiate deductions and credits. The most common are:
- Daycare expenses
- RRSP contributions
- Medical expenses
- Property tax or rent paid
- Donation receipts
These are what I consider the nice and more than reasonable requests. What bothers me and my customers is the ongoing request for information and documentation where it might concern schedules i.e., rental properties or employment expenses. I agree that if the expense is claimed there had better be documentation to support it, however, I take issue with the person at the CRA that is continually asking for more information from what the original demand outlined. The communication can drag on for months.
Paperwork, especially faxes to the CRA, go missing on a regular basis. The stress it puts on taxpayers who’ve done everything right is horrendous. Sometimes it seems like the auditor is creating a make-work project for themselves. Do they get paid a bonus if the audit is dragged on for more than 3 months?
The CRA has a list of 16 rights for your personal taxes and an additional 5 for business. Here are a couple that I believe are of the utmost importance, right from the beginning of the customer-CRA communication.
- You have the right to be represented by a person of your choice. All too often I’ve heard CRA representatives say to taxpayers that there’s no need for the CRA to speak to someone else; that the request is straightforward and shouldn’t take long. If you’re not comfortable in dealing with the CRA, then seek a responsible person to represent you. Don’t be tricked into thinking… you can handle a one-time request or the auditor seems really nice… what could go wrong? Taxpayers also need to understand that they have a certain amount of time to collect their paperwork. The request could be a demand, but it doesn’t have to be responded to in the next 2 hours. To appoint a representative you will need to complete a form titled T1013.
- You have the right to be treated professionally, courteously and fairly. I’ve saw first-hand that this isn’t always the case when I assisted a customer to lodge a complaint against a very rude, demanding and obnoxious auditor. The auditor appeared to be judge and jury, before even starting a very simple fact finding audit. Intimidation indicates a lack of respect and you’ve done nothing yet to cause that.
For the full list of rights for both personal and business taxpayers please click here.
Request for information, documentation and potential audit can bring many a taxpayer to their knees. Know your rights when it comes to dealing with CRA. Get professional help immediately if you’ve procrastinated on responding to the CRA requests, are feeling intimidated or it’s having an impact on your health, business or family life.
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Until next time,