Where are My Tax Slips? Failure to Report Income is on You

Ruth Horst

Are you missing the T slips you need to accurately file tax returns this year?  It’s CRA’s problem, but the consequence is on the taxpayer. Here’s the backdrop and what you can do to help clients avoid paying penalties and interest for missing slips:

The Backdrop.  On April 3^rd, with 16 business days left to go before the April 30 tax filing deadline, the Canada Revenue Agency (CRA) issued an email informing Efilers of the reduced availability of tax slips in CRA portals and Auto-Fill My Return (AFR). This decline is attributed to new validation processes introduced in January 2025 for organizations submitting information returns, which has caused difficulties for issuers in uploading their returns.

This is a late season and unpleasant surprise.   Since 2016, individuals and authorized tax preparers have relied on the CRA portals and the AFR service to automatically download tax slips. Historically, by early April, most slips, particularly T4s and T5s, were available. However, this year, many T4 slips, including those from large employers remain inaccessible.

Further, the deadline given to companies which issue T3 slips that contain a capital disposition was extended to May 1!

Despite these challenges, the CRA maintains that issuers are still obligated to have distributed the slips to recipients by the established deadlines, which have also been in a confusing flux:

April 30:   tax filing deadline for T1 tax filers who don’t report a capital disposition (even if their spouse does) and deadline for paying taxes owing by individuals and proprietors except if their deadline is June 2.

June 2:   tax filing deadline for T1 tax filers who report a capital disposition.  Penalty and interest relief to be provided for those taxpayers only

June 16: tax filing deadline for T1 filers who report proprietorship income

Consequently, individual taxpayers are expected to have all their slips on hand when filing their returns, and so the burden of proof, and filing an accurate tax return is still on the tax filer.

What to do in the absence of receiving the slips?  Taxpayers can manually enter income information from their physical or digital slips copies of their slips when filing their returns. Many taxpayers assume that all their slips on available on the CRA portals.

The Problem: ​When filing a tax return, accurately reporting all income is crucial to avoid potential penalties and interest costs.

If Taxpayer Ted omits a T4 for the 2024 tax year, has a clean record of reporting income in the prior 3 years, and notices it quickly, it is a fairly easy fix. Ted can file an adjustment to the return and he will need to pay the resulting tax as well as some interest. There is a possibility though, that CRA will levy the Gross Negligence Penalty.

If Taxpayer Ted forgets to add a T3 for 2024 but missed reporting even a small T5 of $50.00 interest in 2021, (or in 2022 or 2023) he will now be assessed the Repeated Failure to Report Income Penalty and the Gross Negligence Penalty.

The Penalties: Repeated Failure to Report Income Penalty applies if a taxpayer fails to report income of $500 or more in two or more tax years within a four-year period. The penalty is the lesser amount of:

• 10% of the amount that was not reported (federally & provincially)
• 50% of the difference between:
  • The understated tax or overstated credits for the amount failed to be reported
  • The tax withheld from the amount you failed to report

The Gross Negligence Penalty is imposed when a taxpayer knowingly or under circumstances amounting to gross negligence makes a false statement or omission on their tax return. The penalty is the greater of:

• $100
• 50% of the understated tax or the overstated credits (or both) related to the false statement or omission

When it comes to the T4s, most individuals know where they worked throughout the year but for those who worked multiple jobs and perhaps changed jobs throughout the year, this may be a bit of a challenge. Some unionized tradespeople, such as some electricians, may have multiple jobs throughout the year and 15-20 T4s for one tax year is not unheard of. It is crucial to ensure that all income is completely and accurately reported.

But when it comes to those investment slips, managing investment-related tax documentation can indeed be challenging, due to the variability in income and transactions each year. However, understanding and organizing these documents are crucial for accurate tax reporting and compliance. If a financial planner, investment advisor, or Real Wealth Manager is involved helping the family, they should be able to provide complete information.

Financial institutions, especially those affiliated with major banks, typically issue tax documents at the beginning of the year. These documents often include T3, T5, and T5008 slips, along with summaries of management fees and details of foreign investments. It's important to thoroughly review these documents, as they contain essential information for accurate tax reporting.

However, as mentioned above, this year the T3 filing deadline is postponed to May 1, to account for capital gains transactions.

The T-Slip Matching Program.  CRA routinely runs a Matching Program, typically between September and March, to compare the income reported on tax returns with the information that CRA has on file. This process identifies discrepancies, including unreported income from missing tax slips. At this point the tax returns affected are reassessed and those significant penalties may be imposed.

​Your Defence: Under the Taxpayer Bill of Rights, specifically Right #12, taxpayers in Canada are entitled to request relief from penalties and interest charges if they were unable to meet their tax obligations due to extraordinary circumstances beyond their control.

In the context of seeking relief from penalties and interest under extraordinary circumstances, the Canada Revenue Agency (CRA) emphasizes that the taxpayer bears the responsibility to substantiate their claim. This means demonstrating that all reasonable measures were taken to ensure the tax return was complete and accurate.

Therefore it is important to keep a log of the attempts to access slip information by mail (remember there was a strike this year and mail is still moving slowly) or through the CRA portals or by contacting issuers.  A taxpayers appeal for fairness, which can be initiated through those portals can reverse penalties and interest.

Request for Taxpayer Relief – Cancel or Waive Penalties and Interest – Form RC4288 .  A request can be made for the following reasons:

• Financial hardship
• Death, accident, serious illness, emotional or mental distress
• Nature or human-made disaster
• Civil disturbance or disruptions in services
• CRA delay or error

Voluntary Disclosures Program (VDP) grants relief on a case by cases basis to individuals who voluntarily come forward to fix omissions and/or errors. To qualify all of the four following conditions must be met:

• CRA has not contacted the taxpayer about this oversight
• Full and complete information must be provided
• There must be a penalty involved
• The outstanding information must be more than 1 year overdue

If this situation exists, Form RC199 must be filled out and submitted with payment of the estimated tax payable. CRA will then choose to accept the VDP or not. If it is accepted, penalties may be waived but interest will still be due.

Be Prepared to Wait for the Money.  Both the VDP and Taxpayer Relief take a long time to resolve with CRA, often years. In order to present a valid case to CRA, again, the burden of proof is on the taxpayer:

• to provide sufficient evidence to challenge CRA’s judgement
• to demonstrate due diligence
• evidence of extraordinary circumstance

Be Prepared.  Comprehensive documentation is key and a journal of the efforts of the taxpayer to gather the required information is important. The taxpayer should:

• Document Receipt of Slips:
  • Note the date each tax slip (e.g., T4, T5, T3) is received. This helps track which documents are pending and which have been accounted for.​
• Monitor CRA's My Account or RAC:
  • Regularly check your CRA My Account or RAC. Record the dates of these checks and any actions taken.​
• Log Communications:
  • Keep a detailed journal of all interactions with the CRA, financial advisors, or other relevant parties. Include dates, names of individuals contacted, topics discussed, and outcomes. This provides a clear timeline of the taxpayer’s efforts.​
• Engage Financial Advisors Proactively:
  • Regularly consult with their bank, financial advisor, or wealth manager to ensure all necessary financial documents are in order. These interactions should be documented, noting any advice received or actions taken.

Systematically recording these details creates a comprehensive audit trail that shows commitment to compliance.

The Bottom Line: It is important that taxpayers are prepared now for the potential of these assessments. Tax Specialists and Financial Planners working with Real Wealth Managers can collaborate in the diligence required to assist clients on an urgent basis to meet deadlines imposed by CRA.

Additional Educational Resources:  Mark your calendar and register a Real Wealth Management Program Orientation that will be presented on Wednesday April 23^rd at 11am CST by the Knowledge Bureau.  Real Wealth Managers are the trusted advisors who assist a multi-disciplinary team of professional advisors to enable tax-efficient investment strategies with the client and their family to mitigate the key wealth eroders:  taxes, inflation and fees like interest and penalties.  Join us!