Sometimes after you file your return CRA sends a letter requesting further information. While these ‘Pre-Assessment Reviews’ don’t necessarily spell trouble, ignoring them can.
A pre-assessment review is a request for additional information on a return that’s been filed with CRA. As the name suggests, it usually comes out before the return has been assessed; that is to say, before CRA has accepted a particular set of figures as your return for a given year and sent out a Notice of Assessment.
These reviews can be triggered by a number of simple situations. It could be a jump in a figure that usually stays steady, such as medical expenses that usually hover around $300 suddenly leaping up to $3,000. To CRA that looks like it might be a typo, so they ask to see receipts. Another trigger could be a figure that just looks high in general, like very expensive daycare fees for a very young child. Similarly, they’ll ask for receipts.
Sometimes the situation is simply that you’re making a claim that amounts to requesting money other than a refund (remember that a refund is always a repayment of money that you’ve already sent to CRA through the year). An example might be, an Ontario Trillium benefit, which is a reimbursement of a part of your rent or property tax paid in Ontario available to low income households. Again, CRA will request proof, in the form of a rent receipt or cancelled cheques made out to your landlord.
Generally the review will set a deadline for the requested information. If the information isn’t received by the deadline, in the interest of time CRA will simply remove the claim and process the return without it, which usually means a higher tax bill/lower tax refund for the taxpayer.
These letters appear scary because they do include that deadline, and because the instructions for responding are long and detailed. But remember that these letters are generated by a computer, and the intention is to give you all the information you could possibly need, which means covering every possible situation and every possible means of response.
In other words, it looks complicated, but it’s really just information overload. Usually what CRA is requesting is pretty straightforward in practical terms.
Don’t worry if you’ve missed the deadline and CRA has already removed your claim – despite the deadline you can always go back at a later date and provide the requested information, and CRA will revise your return again. The deadline only serves as a limit to how long CRA will wait before they simply adjust the figures unilaterally and issue a Notice of Assessment. Missing the deadline also does not necessarily mean you’ve been flagged in any way. CRA is aware that many people just never get around to it.
If you receive a pre-assessment review, read it through carefully and calmly to see what they’re actually requesting or call your tax preparer to work through it with you. They’re usually not difficult to respond to in the end.
Note: Personal Tax Advisors clients can simply send a picture of the letter to their preparer, who will then explain how to proceed and assist in the process if required.