dailynewsnblog
The Canada Revenue Agency (CRA) probably knows what you did last summer — and last spring, winter and fall. Long before you file your taxes, the agency assembles a substantial profile that can be perfectly accurate around income, though much less complete in other areas.
“Some clients would be surprised by how much the CRA knows,” says Ameer Abdulla, a tax partner at EY Canada. “But others are counting on it. They expect to be able to download everything and have it already there.”
With filing now largely digital, the two-party nature of wages and investment income means employers and banks generally provide most income details before a taxpayer begins their return.
That picture can extend beyond income, incorporating other filings and data sources to build a broader profile of a taxpayer. Charles Drouin, a CRA spokesperson, told Yahoo Finance Canada in an interview that the overall portrait the agency builds for taxpayers can surprise some people because of its completeness, but annoy others because that completeness isn’t guaranteed.
“Just because we usually get most of your tax slips, it doesn’t mean we’ll have everything on file,” Drouin says.
The CRA’s knowledge is also asymmetrical: the agency knows a lot, if not all, about how much people have earned, but it’s much less knowledgeable about other things people have done.
“They have all of your income-related slips — your T4, T5, T3, 5008, 5013 — all of that information is already there,” Abdulla says. “What they don’t have are a lot of the deductions: medical, donations, professional dues.”
If your circumstances change, Drouin notes, it’s up to you to make sure the CRA has that information, so you can claim any benefits or credits for which you’re eligible.
“If we know, for example, that you’re in the North, that’s something we can identify,” Drouin said. “But if you have a child and we’re not aware, you have to inform us so you can get the credit.”
This imbalance is where the taxpayer remains critical. While income is mostly reported automatically, things that reduce a tax bill (such as medical expenses or donations) depend on individuals to track and submit. Even on the income side, completeness isn’t guaranteed if an employer is late. If a slip is missing, the responsibility still falls to the taxpayer to track it down, something that can frustrate those who expect the system to already have everything in place. Missing information can also lead to a review of your return.
At the same time, Abdulla says the CRA’s understanding of taxpayers can extend beyond what appears on a typical return, drawing on multiple sources of information to build a broader picture of a taxpayer, though not always a complete one.
