Be prepared for CRA's review of your personal income tax return

01 Oct 2019

JingJing Shen, CPA - Accounting Associate

Canada Revenue Agency (CRA) randomly selects taxpayer's return to do pre or post assessment reviews to ensure the return was filed accurately. The following items are frequently reviewed, so be prepared with supporting documents.

Amount for spouse or common-law partner and eligible dependents (credit)

  • Court order or written agreement outlining the custody arrangements and the support paid or required to be paid. The court order or written agreement has to be signed by both parents, a court official, or by all three.
  • If you do not have a court order or written agreement, send a signed statement from the other parent detailing the custody arrangements and, if applicable, the support paid or required to be paid by who.

Medical expenses for self, spouse, common-law and dependent under 18 years old (credit)

  • Insurance company statement including the name and type of medicine; and the amount that was or will be reimbursed by the insurance plan.
  • Receipt for premiums paid to private health services or group insurance plans for medical, hospital, and dental expenses.
  • Home renovations or alterations:
    • a completed disability tax credit certificate (Form T2201);
    • detailed receipts for the cost of renovations or alterations detailing the work done;
    • a breakdown of the costs;
    • a letter from the medical practitioner certifying that the home renovations or alterations were needed for medical reasons if the patient is not eligible for the disability tax credit.
  • Full-time care in a nursing home
    • a completed Form T2201;
    • a letter from the medical practitioner certifying that the patient depends and will continue to depend on others for their personal needs and care because of physical or mental impairment.
  • Attendant care in Canada or in a retirement home
    • a completed form T2201;
    • receipts for salaries and wages paid.

Child care expenses (deduction)

  • Receipts including the full name of the child, amount paid, signature of the person who provided the services, name of the child's parent, SIN if the provider is a person; or T4 slip you issued to the person, if applicable.

Home buyer's amount (credit)

  • Legal documents from the lawyer, mortgage documents, purchase agreement and date you occupy the home as a principal residence.
  • Receipts for survey costs, land transfer taxes, legal fees and fees to secure a mortgage.

Foreign income tax (credit)

  • Documents stating the foreign income and final tax liability such as notice of assessment or statement from the foreign authority, foreign income tax return and attachments and all information slips.
  • If all the above documents are unavailable, CRA also accepts proof of payment made to or refund received from the foreign tax authority. For example, bank statements, cancelled cheques.
  • If you don't need to file a tax return due to the foreign government's filing requirements, you need to send CRA a statement from the employer (pay as you earn tax system) or official documents (such as income slips) confirming the name of the country, the type and amount of income, the gross foreign income received and the amount of taxes withheld.

Self-employment expenses

  • A breakdown and details of the expenses you claimed;
  • A description and the cost for each item included in the meals and entertainment.
  • If you claim home office, you need to provide the full address of the business and of your residence; property tax, rent receipts, or both for the business and your client's residence; the method used to calculate the percentage of household expenses for the business-use-of-home and the part that related to your client's personal use.

The above are examples of credits and deductions that are commonly claimed by taxpayers. If any of them apply to your situation, keep records to support your claim. The above list is not all-inclusive, please consult SBLR if your return is selected by CRA or if you need help preparing your personal income tax.