What is an Information Request?
Canada uses a voluntary self assessment tax system. Once a taxpayer submits their tax return, The Canada Revenue Agency (CRA) produces a notice of assessment. Further review is initiated based on algorithms used by the CRA to find possible discrepancies in what the taxpayer reported. The CRA then performs a first level audit called an information request.
Have you Received a Request?
Information requests are sent to the tax preparer but occasionally are sent to the client. Fortunately, if you’re a tax client at CH Financial we can take care of this for you. By having signed a “T1013: Authorizing or Cancelling a Representative” form, our office can communicate with CRA on your behalf. There is a good possibility our office has previously responded to an information request from the CRA on your behalf without you knowing about it. Most requests don’t require any more information than we already have on file, but if we require anything more we will contact you.
What Kind of Information?
Information that the CRA requests varies amongst our clients. Requests could be for documentation of tuition, receipts for moving expenses, or a T3 slip with non-business foreign tax paid. The most common information requests our office receives are for medical expenses and charitable donations. Requests are usually for the most recent tax year but could be for previous years as well.
What’s the Process?
Upon receiving an information request, our team uses a reference code provided on the request to identify what information is required. Staff sorts through all documents securely stored in your tax file to support a reply to the CRA. Relevant documentation is then packaged in an easy to process format before being securely faxed to a CRA processing centre. This process is completed within 30 days of the date on the CRA letter. We track our office’s reply to the request as it can take the CRA up to twelve weeks to respond. After reviewing our response, the CRA will inform us if the request has been approved, denied, or more information is needed. If more information is needed, we follow up and resubmit our reply with further documentation or explanation, which could include new details requested from you directly.
What are the Outcomes?
Although an information request is only a minor audit, it must be dealt with in a timely matter. Not responding to an information request or having a response denied can result in a client with declined deductions or increased income. Our goal is to mitigate such risks and reduce any possibility of stressful communication between our clients and the CRA.