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The Canada Revenue Agency's review activities

The Canada Revenue Agency (CRA) wants to make sure that you are paying the correct amount of taxes, not too much and not too little.

Completing your income tax return can sometimes be complex. The CRA conducts a number of reviews to ensure that income, deductions, and credits are accurately reported and filed. These reviews promote client education by identifying common areas of misunderstanding.

There are three main types of reviews: the Pre-assessment Review Program, the Processing Review Program and the Matching Program.

The Pre-assessment Review Program electronically analyzes individual income tax returns to identify situations that represent a higher risk of tax loss. Through this program, various deductions and credits on returns are reviewed and corrected before a Notice of Assessment is issued.

The Processing Review Program, occurring after a Notice of Assessment is issued, involves reviewing individual income tax returns to ensure that certain claimed deductions and credits are accurate and supported by documentation.

Canadians file approximately 25 million income tax returns each year, and all are electronically analyzed. Based on the analysis, returns are selected for review for one of two reasons: they are high risk, or they are selected as part of a random sample to measure non-compliance for the entire tax-filing population. Taxpayers who are being reviewed are notified by mail. If the review identifies an error, taxpayers will receive a new Notice of Assessment. If no error is identified, the taxpayer will receive a letter saying that no adjustment is necessary.

The Matching Program ensures that information slips filed by a third party, such as an employer or a bank, correspond to the information reported by the taxpayer. Payers and financial institutions submit a copy of all slips they issue, which are cross-referenced with the filed income tax return after a Notice of Assessment is issued.

All tax returns are matched to third party information slips. If there is a discrepancy between the income reported by the taxpayer and the income reported by the third party, the CRA may contact the taxpayer by mail or telephone for clarification. If it is determined that an adjustment is required after the review is complete, a new Notice of Assessment is sent to the taxpayer.

Each year, increasing numbers of taxpayers file their tax returns online using NETFILE or EFILE. Although electronic filers are not required to send the CRA their receipts, they shouldn't banish them to the recycling bin just yet! Taxpayers are required to send their receipts to the CRA if their returns undergo a review.

For tax year 2006, over 1.2 million tax returns were reviewed using the Pre-assessment and Processing Review programs and generated an additional $250 million in tax. The CRA also reviewed almost 1.5 million tax returns using the Matching Program, which recovered approximately $450 million in additional tax. Matching may benefit the taxpayer; almost a quarter of a million tax returns were adjusted resulting in close to $75 million in refunds.

For more information on the Pre-assessment, Processing Review, and Matching programs, visit the CRA Web site at cra.gc.ca/reviews.

This document is also available for download in PDF format.

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Date modified:

2014-12-03