A Canada Revenue Agency audit is a stressful and time-consuming process. Taxpayers who file inaccurate or incomplete returns have a greater chance of being selected for an audit. Using the CRA’s My Account platform can help ensure that you are not among the unlucky ones who are selected for an audit.
How Taxpayers Are Selected for Audits
There are a number of reasons why an income tax return may be selected in one of the CRA’s review programs. These reasons include random selection, the types of deductions or credits claimed, and an individual taxpayer’s review history.
Another frequent reason for audit is the systematic comparison of information on returns to information received from third-party sources, such as employers. For example, if your T4 slips do not match your employer’s T4 summary, there is a good chance that you will be selected for a further audit.
Using My Account to Avoid Being Selected for an Audit
The principal advantage of the My Account online tool is that it allows you to access all of your tax information and account balances in a single place at your convenience. With full access to your information, you should be able to make sure your tax return is accurate.
You file new tax returns for every calendar year, but it is often useful to refer to past filings to make sure you are filing accurately in the current year. Using My Account, you can access the information from your returns dating back to 2005 directly online. Click on the Tax Returns tab and then click View Returns and Notices of Assessment and Reassessment. From there, you can consult and even print your returns.
Previous Notices of Assessment and Reassessment also contain information that you may need when preparing your return. For 2015 and more recent years, detailed notices are available on My Account, while summaries are available for the periods prior to that, going as far back to 2005.
The Income Tax Act contains many provisions that are cumulative over a number of years. For example, many losses can be carried forward, and unused registered retirement savings plan contributions can be accumulated for use in future years. Using My Account, you can access your balances directly online and see your previous activity in the Tax Returns section of My Account.
If you participated in a home buyers’ plan or a lifetime learning plan, you can see your plan history and the amount of your mandatory repayment for the current year under the RRSP and Savings Plans tab. Make sure to report these correctly to avoid costly penalties.
Keep your personal information up-to-date in the CRA’s files; this has a major impact on the audit of your tax returns. Many credits are affected by your marital status or the number of dependents that you have. In the Personal Information section of My Account, you can update your address, telephone number and marital status instantly.