What is Post Assessment Scrutiny of CRA?

What is the Process?

After you file your Income Tax and Benefit Return for the year 2015, the Canada Revenue Agency would assess your Income Tax Return within its specified time limit and release an Income tax refund, if any.

Why Post Assessment?

After issuing Notice of Assessments to tax payers, Canada Revenue Agency (CRA) undertakes the program of conducting Post Assessment scrutiny of the tax returns filed by the tax payers. This is done in order to have faith in the self- assessment system of filing tax returns. A self-assessment tax system means you assess your own tax owing or tax refund.

Time Period Allowed:

As a part of conducting this program, CRA requests various tax documents and tax slips, in support of the tax payer’s claim on his income tax return already filed. CRA normally provides 30 days’ time period to taxpayers to submit the documents to them. In case if the tax return is e-filed, they may ask e-filers to submit the tax documents in addition to asking the tax payer for the same.

In case if no response is received either from the e-filer or the tax payer, CRA will disallow the claim made on the income tax return and ask for the tax owing. E-filers are registered with CRA and therefore CRA is able to track them and communicate with them.

Not all the returns are selected for the post assessment scrutiny but only a small percentage of the tax returns are selected for it.

Selection Criteria:

The selection for the post assessment scrutiny is very objective and not subjective. CRA selects income tax returns based on objective criteria determined each year (e.g. a claim made on the particular line of the income tax return, unusually large amounts of claim made or apparent mistake claims).

Tax Documents submitted after the Time Limit:

If the documents asked by CRA are not submitted within the specified time limit, they may be admitted by CRA later on when the documents are submitted after the time limit as well. However, in the meantime CRA will ask for the tax owing due to the disallowance of the claim.

Therefore, it is extremely important to make the claim on your income tax return when you have the adequate documents in support of your claim (e.g. rent claim made in Ontario for claiming Ontario Trillium Benefit). The taxpayer must ensure that he has a rent receipt before such claim is made on his income tax return.

 What happens If you disagree with the reassessment of CRA?  

 In case if you disagree with the reassessment of CRA, you can formally object to their reassessment within 90 days from the date of reassessment.