CRA is Going Fishing for you

So I got the email (reproduced below) from the CRA.  As an e-filer I get CRA emails on things that are going on.  I want to share this with you so you are not surprised if you get one of these letters.  Contrary to popular belief, CRA are not omnipotent and all knowing.  If you over claimed that meal out with the spouse or padded your kilometers by a couple of hundred, they will not know.  That said, if you filed your taxes and the only thing that is truthful on the return is your name, you may want to consider an amendment, otherwise ignore the letter.

The reason I share this is because usually the first words uttered (actually the second words, because the first are usually “oh Sh!t”) are “what did my accountant screw up now?”.  As you can see from the email CRA is sending out random letters to anyone they think has expenses that may be too high.  Remember just because the CRA sends you a letter does not mean that you have done anything wrong.  Further, just because they send you a letter does not mean that they are going to audit you.  This is a fishing trip by the CRA.  Will they audit some of the people who get letters?  Yes, absolutely.  However, they are going to start with what they perceive to be the most offensive.  If you made $200K and after expenses you had net income of $15,000, there is a very good chance you will be audited.  If you were reasonable and your accountant gave you good advice, you should be fine.  Don’t worry, be happy.

CRA Email - English Version *** La version française suit ***

The Canada Revenue Agency (CRA) will soon be conducting its fourth annual letter campaign. In January 2013, the Small and Medium Enterprises Directorate of the Compliance Programs Branch will once again send educational and intent-to-audit letters to selected groups of Canadians through the Office Audit Letter Campaign. The campaign supports the CRA’s increased emphasis on helping individuals and small businesses to better understand their tax obligations and to encourage them to correct any inaccuracies in their past income tax and benefit returns.

The CRA will send approximately 33,000 letters to taxpayers who earn self-employment income, receive rental income, or are employees who have claimed employment expenses on line 229 of their income tax and benefit return.

The campaign is part of the CRA’s efforts to encourage voluntary compliance among groups of taxpayers who, our research indicates, may be at risk of non-compliance.

The CRA gives taxpayers a chance to come forward and correct their tax affairs through My Account, a T1 Adjustment Request or the Voluntary Disclosures Program, and taxpayers are taking advantage of these opportunities.

If you or your clients have questions about the CRA letter campaign or need help making changes to previously filed returns, go to www.cra.gc.ca/lettercampaign, call the Individual Income Tax Enquiries line at 1-800-959-8281, or call the Business Enquiries line at 1-800-959-5525.