Claiming Home Renos, Donations or Child Care? Auditing Is Possible

Approximately three million people will have their tax returns audited this year, if the previous pattern of reviewing tax returns by the CRA is any indication. The CRA has advised that in 2008 they reviewed approximately 2.8 million tax returns and many of these reviews are done when the tax returns are received and before a notice of assessment is mailed. The returns are reviewed to verify the income reported as well as the credits and deduction amounts claimed by the taxpayer.

CRA will contact taxpayers to request information relating to income sources, receipts or dependents claimed on the tax return. Some areas of interest are as follows:

• Home renovation tax credit
• Charitable donations
• Child care expenses
• Spousal payments
• Support payments
•  RRSP contributions

So make sure that your receipts are retrievable in the event you need to verify any amounts reported on your income tax return.

The administrative provisions of the Income Tax Act deal with the various issues that can arise with respect to tax returns are:

• Filing a return; S. 150 sets out the deadlines for filing the return
• CRA's assessing, auditing and reassessing a return; S. 150.1 provides the authority for the Minister to accept the return that is filed electronically..
• A taxpayer's objecting to an assessment or reassessment, and appealing CRA's confirmation of an assessment or reassessment and the statutory and administrative provisions that permit CRA to provide fair treatment and administrative relief to taxpayers; S. 151 requires that everyone who files a return estimate on that return the amount of tax that is owed.

For more information on CRA review of tax returns visit their website at www.cra.gc.ca/review.