It’s time to make a match.
That might sound like fun, especially if you’re looking for a mate, but in this case, it’s the Canada Revenue Agency (CRA) doing the matching. And they’re looking for inconsistencies in your 2012 tax returns.
The matching program is one of several CRA review processes. It runs October through March and the checkers are comparing the information on your T-1 personal income tax return to information provided by third-party sources, such as employers and financial institutions.
The matching program corrects netincome to ensure accurate payments from the child tax benefit, GST/HST and the Guaranteed Income Supplement. It also corrects errors in your RRSP deduction limit and spouse-related claims.
If the CRA finds discrepancies, you get a lovely brown envelope with a letter requesting more information.
Errors in income reporting
If the CRA reps fnd discrepancies in your income reporting, you could face a hefty fine.
The Income Tax Act declares that you must report all of your income. If you fail to report any income in the tax year being reviewed, or in any of the previous three years, you will receive a ntoice of reassessment for additional taxes on the unreported income. You may also get hit with a penalty for repeat failure to report income. The fine is 20 per cent of the income that was not reported.
Your only defence is to prove you exercised due diligence in reporting your income.
More often than not, unreported income is a result of missing T-slips through no fault of our own. It may have gotten lost in the mail or sent to the wrong address.
If you are missing a T-slip at tax time, the CRA advises that you use pay stubs to estimate your income and related deductions and credits.
If you receive the T-slip after filing, you must file a T-1 adjustment. The CRA recommends you wait until after you receive your Notice of Assessment.
Here to help
A1 Accounting, a Calgary accounting and bookkeeping firm, is here to assist you with your taxes and planning. We specialize in personal taxes and small-business accounting and financial services. Contact one of our tax specialists and we can help you optimize the tax benefits and credits available to self-employed individuals and small businesses.
Fill out our contact form or give us a call at 403-226-8297.