So what happened after April 30 last year that sheds light on what may be sage advice for 2018 tax prep in terms of CRA reviews?
Well not much changed. The typical CRA hot tickets for review, remained hot tickets for review, albeit with some shifting around of top priority items perhaps.
Your action plan for 2018 tax prep should involve mindful reporting if one or more of the following occurred in your life in 2018.
A medical expense claim tops the list, like most years. This is such a wide ranging, all encompassing, emotionally draining claim, not to mention expensive. The detail and nuance around this claim just makes it more complex each year, and therefore remains under scrutiny by CRA.
There was an upsurge in reviews of the Volunteer Firefighter and Search & Rescue claim. When it was introduced a few years back it was monitored by CRA so to speak, but this past year CRA put it under the microscope again. Be sure the $1,000 income exemption and the $3,000 expense deduction are both not claimed - only one or the other.
CRA eliminated the education amount as part of the tuition claim for 2017 tax prep so CRA was checking to make sure it was not being claimed, among the other standard reasons for reviewing this claim such as making sure the claim is supported with a T2202a slip.
Donations, likely due to fraudulent claims by organizations claiming to be registered and issuing bogus tax receipts, plus the fact people claim donations that are not actually supported by proper documents.
Union dues, likely due to the often duplicated claim created because the dues are sometimes reported on a T4 and also on an official slip from the union.
Because governments worldwide are ferreting out tax dollars wherever possible and CRA is no exception, foreign income reporting and claims for the foreign tax credit has become a regular review item.
There’s no trick to avoid a review. So if you take tax prep seriously, and if a review comes your way, what could be painful may likely just be annoying. Be sure to respond within the 30 day limit or CRA will re-assess automatically. It will take a T1 adjustment to change it back.
If you used a professional tax preparer, perhaps they will handle the review or at least offer you some guidance, although not all firms do this free of charge.
Ron Clarke has his MBA and is a business owner in Trail, providing accounting and tax services. Email him at ron.clarke@JBSbiz.ca. To read previous Tax Tips & Pits columns visit www.JBSbiz.net.