CRA & Revenu Québec

The Canada Revenue Agency’s Matching Program

In Canada, the tax system is based on self-assessment. Accordingly, it is your responsibility to get your file your tax return properly by declaring your income and claiming relevant credits and deductions. It can be challenging for the Canada Revenue Agency to keep track of every taxpayers return. This is why the Canada Revenue Agency has various methods to catch taxpayers who fail to report income — either by mistake or on purpose. One of these methods is the CRA’s matching program, which compares source information to amounts reported on your tax return.

How the CRA’s Matching Program Works

Under the matching program, the CRA reviews your income, tax credits and deductions against the amounts it has on file. This ensures that your return is accurate. The matching program is a review that takes place after your notice of assessment has been sent in the mail or Netfiled, usually between the months of October and March. Under this program, the CRA compares information from your tax return against tax slips provided by third parties, including your employer and bank. For example, the employment income from your T4 slip is compared against the amount reported on your tax return.

The matching programs extends beyond your individual tax return. The program also provides assistance to government benefits and programs like the Canada Child Benefit, the GST/HST credit and the Guaranteed Income Supplement. If your net income is incorrectly reported, the CRA will correct the amount reported for these credits and programs. Inaccurately reporting your income can also affect your RRSP deduction limit, and amounts your spouse or common-law partner is claiming such as child care expenses and provincial tax credits.

The Beneficial Client Adjustments Initiative

Besides helping to ensure that tax returns are accurate, the matching program also assists with the Beneficial Client Adjustments Initiative. Under this program, the CRA looks for tax credits that were unclaimed for tax deducted at source, as well as Canada Pension Plan contributions. The CRA does this by comparing your tax return to information submitted by your employer or bank and adjusting your tax return accordingly.

Results of Failing to Report Income

If this is your first time forgetting to include income on your tax return, you will be issued a notice of reassessment with the amount of taxes owing and applicable interest. However, if this has happened on other occasions, you will be issued a hefty 20 percent penalty based on the unreported income — this includes a 10 percent federal penalty and a 10 percent provincial penalty.

The CRA’s My Account Online Service

You can use the CRA’s My Account online service to ensure that you are not missing any tax slips. To do so, log on to My Account and click on the link View Your T4 and Other Tax Slip Information. Here you can find various types of T4 slips, including the T4, T4A, T4A(P), T4A(OAS) and T4E. It’s important to ensure these amounts are reported correctly on your tax return to avoid a reassessment and potential audit.

References & Resources