Receiving contact from CRA is anxiety-inducing for most self-employed Canadians. The immediate instinct is often to assume the worst. Understanding what different types of CRA contact actually mean lets you respond appropriately rather than reactively.
Types of CRA Contact
Not all CRA contact is adversarial. The most common types of contact for self-employed individuals are:
Processing notices are routine. A Notice of Assessment is CRA confirming that your return was processed. A Notice of Reassessment indicates a change was made, which may be beneficial (a refund adjustment) or adverse (a balance owing).
Information requests ask you to provide documentation for specific items on your return. These are common and do not indicate wrongdoing. CRA selects returns for review based on automated risk criteria, and many information requests are resolved quickly with supporting documents.
Matching reviews compare income reported on your return against T4A slips, T5 slips, and other third-party reporting. If a T4A was filed for income you did not report, CRA will ask about the discrepancy.
Desk audits are a more structured review of specific line items or deductions. A CRA officer reviews your documentation and may request additional information. Desk audits are conducted by mail or phone.
Field audits are on-site audits conducted at your place of business or your accountant’s office. These are less common and typically involve more complex situations or larger amounts.
What to Do When You Receive a CRA Letter
Read it carefully. The letter specifies exactly what CRA is asking for: which tax years, which line items, and which supporting documents. The scope is important. CRA is reviewing specific items, not your entire return.
Note the response deadline. CRA letters include a response deadline. Missing it results in CRA proceeding without your response, typically resulting in a reassessment that removes the disputed deduction or adds the disputed income.
Gather the requested documentation. For home office and vehicle expense reviews, this means expense receipts, mileage logs, and floor plans. For business income reviews, it means invoices, contracts, and bank statements. Provide what was asked, not more.
Respond in writing. All correspondence with CRA should be in writing or through a documented channel (My Account, MyBusiness Account, or secure mail). Keep copies of everything you send.
If Your Return Is Reassessed
A Notice of Reassessment indicates CRA has changed your return. This may result in a reduced refund, a balance owing, or additional interest and penalties.
You have the right to object to a reassessment. The formal process begins with a Notice of Objection filed within 90 days of the date on the reassessment notice. If the objection does not resolve the matter, you have the right to appeal to the Tax Court of Canada.
An objection is not the first step. Before filing formally, contact the CRA officer handling your file and understand the basis of the reassessment. Many reassessments are resolved at the officer level with additional documentation.
Common Review Triggers for Self-Employed Canadians
Understanding what draws CRA’s attention helps you maintain the documentation to respond.
Home office expenses: CRA looks for the exclusive use requirement, the basis of the calculation, and receipts for the amounts claimed.
Vehicle expenses: CRA routinely requests mileage logs for vehicle expense claims. A mileage log is not optional.
Business losses: A business that reports losses for multiple consecutive years attracts attention. CRA may question whether the activity is a business or a personal endeavour.
Significant income changes: Large year-over-year changes in reported income, either up or down, can trigger an information request.
Missing T4As: CRA matches T4As filed by your clients against your return. If a client filed a T4A for CAD $45,000 and you did not report it, you will hear from CRA. Unresolved issues can result in penalties and interest that accrue from the original filing date.
Working with Your Accountant During a CRA Review
If you are already working with an accountant, involve them immediately. They can authorize CRA to speak with them directly, manage the correspondence, and ensure your response is complete and accurate.
If you receive a CRA letter after filing a return prepared by an accountant, contact the accountant before responding. The accountant may have records supporting the item under review or may need to advise on the documentation required.
If you prepared your own return, the CRA letter specifies what documentation to provide. Gather it, review it for completeness, and respond within the deadline.