Time to Avoid the CRA Red Flags Again

CRA tax filings

With it being tax time once again it also means that it’s time to avoid the potential red flags that can be raised by the CRA regarding your tax filing.  Most everyone wants to go unnoticed with this department unless of course they are expecting a tax return.

There are some common areas on the tax return that if changes have been made they can potentially draw the attention of the tax department.  These are your attention getters that you really want to avoid.

Once you have filed your return your hope is that it’s the last that you have to do regarding the CRA.  Then you receive a CRA request for further information.  All of a sudden they want to see one or two of your receipts that you used to claim an expense on your return.   Your first thought may be just to forget about it assuming that that they will not pursue it any further.   This can create a problem for you, because all of a sudden now the CRA is wondering why you are avoiding them.   Not only is this going to create problems for you for the current tax year, but it could mark you for future tax years to be scrutinized more closely.

Big changes on your tax return are going to draw interest as well.  This can be either in your income or your expenses.   So make sure that if there are big changes that have taken place that they are valid and you are going to be able to back them up with documentation.

The trend now is for many people to work at home which means they have a home office.  This is where a lot of problems arise as many people over claim their expenses in regards to the personal use of the home compared to the business use.   The CRA will automatically review these a little closer.   That doesn’t mean to say that you cannot claim the valid expenses, just be sure that that they are accurate and well documented.   This is an area that you want to discuss with your tax accountant to make sure that you are following all of the rules pertaining to the home office.

It is not unusual especially in this day of age for people to be working several part time jobs.   It is easy when it comes to tax time to forget where one may have worked for a few months, especially if they haven’t received their T4 slip.   What has to be remembered here is that the CRA also receives a copy of these T4s.  If you have made an error in forgetting one you will be contacted by the CRA and you will be reassessed.   This is not a habit that you want to get into.  The CRA can be forgiving when it is a one time occurrence, but if this is something that you have done twice in a four year period for example, you could end up being hit with a double penalty.

Something else that many people don’t realize is that the CRA is quite aware of what the average income is for a residential area.   If you happen to be living in a mid income area and you are reporting income that is much lower compared to your neighbors for example, this in itself could create a red flag.


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Sam Seidman, CPA, CA, LPA
629 Sheppard Avenue West
Toronto, Ontario
M3H 2S3

Telephone: (416) 398-1700
Fax: (416) 398-6226

Chartered Professional Accountant, Chartered Accountant, Licensed Public Accountant


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