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This was in a review of a previous tax return. The error is high four figures which translates into a low four figures refund.

Do they keep copies of the documentation?

What are the chances they would find out the error on their own?

If you were in the same situation, would you bring the error to their attention?

I should mention that I'm very aggressive in claiming deductions in our tax returns. For the past several years, CRA has asked us to provide more information, at considerable cost in time and effort for myself, and I've been successful in defending each one. So I guess we're in their special attention file.

Thank you,

(un)Lucky

  • To be clear, do you think the CRA is correct here, or do you think they have made a mistake? What's the nature of the difference? – ChrisInEdmonton Sep 18 '14 at 15:13
  • For sure, they made a mistake in their reassessment. It was a deduction which shouldn't have been applied. I even highlighted in the documentation and put in the cover letter why it shouldn't have been applied! – Lucky Sep 18 '14 at 15:25
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    If you pointed out to them that the deduction shouldn't have been applied, and they applied it, I think it would be reasonable to assume that CRA disagreed with you and thought it should be applied. It the least that's what I would say if at some later date CRA asks for it back. – DJClayworth Sep 19 '14 at 17:41
  • @DJClayworth - Thank you, that might at least save me from paying interest. When I think I might be stretching the rules for a deduction, I imagine myself explaining it to someone from CRA. If I can sound convincing, I go for it! – Lucky Sep 19 '14 at 18:29
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They keep records on all interactions with you. It is quite unlikely that they will discover it on their own as you are using the numbers they generated so they are unlikely to recheck their conclusions as the inputs that led to those conclusions haven't changed.

As to whether you should bring it to their attention, that's up to you. Consequence-wise it's only going to come up if you get audited (which is quite different from the request from more information). If I recall correctly, the statute of limitations for Canadian taxes is seven years. Late fees are described here . Odds are good you will get away with it but in the end it is a gamble.

Bottom line is that as a citizen you do owe that money and you know it but I think you are looking for practical advice rather than ethical so I'll leave that to you.

Edit: Further information on statute of limitations. Much shorter than I thought.

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    The 7 years apply only to regular audits. If you are suspected of fraud, omission or a simple error there is no limit to how far back the CRA can go. – ApplePie Sep 22 '14 at 3:24
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    @AlexandreP.Levasseur is there a link you could provide with that? – Jedidja Sep 22 '14 at 13:15

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