Keep Your Records to Support Your Income Tax and Benefit Return

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The following information is available on the CRA Web site:

News Release:

Ottawa, Ontario, June 3, 2010. . . Canadians who file their income tax and benefit returns electronically, or who do not file information slips and receipts with their paper-filed returns, should keep their tax records on hand in case they are contacted by the Canada Revenue Agency (CRA).

After returns are filed, the CRA verifies the income reported, as well as the credits and deductions claimed. Reviewing filed returns is essential to protecting the integrity of Canada’s self-assessment tax system and to ensuring that Canadians pay their taxes. For the 2008 tax year, about 2.4 million individual returns were reviewed.

Some of the first reviews of deductions and credits are done when the returns are filed, and before taxpayers receive their notices of assessment. However, most reviews take place later in the year, as the CRA works to verify the information on an individual’s return and compares it with the information provided by other parties, such as employers, spouses, or common-law partners.

During this review process, the CRA may contact taxpayers to ask for more information on income sources or dependants. We may also request copies of receipts or information slips to support claims related to:

* medical expenses;
* charitable donations;
* child care expenses;
* spousal or child support payments;
* moving expenses;
* the home renovation tax credit; or
* registered retirement savings plan contributions.

In addition, the CRA may ask you to support your claim by providing proof of payment in the form of cancelled cheques, bank statements, or other documentation.

Keeping your records on hand makes it easier to respond to these requests. It will also help you explain your tax and benefit situation to the CRA if you do not agree with your assessment or reassessment.

Receiving a request for receipts or documentation does not mean you are being audited by the CRA. When an individual is selected for an audit, the CRA tells them that their tax and benefit situation is being reviewed and calls to arrange a meeting to begin the audit.

For more information about the CRA’s review of returns, go to http://www.cra.gc.ca/reviews.

Source: CRA Newsroom

By the way … it is recommended that you keep ALL your income tax records for at least six years. Generally speaking, Canada Revenue Agency would only request information from the past three years, but if they determine a need for more information from information discovered in any of these first three years back .. they can request to look at another three years in your past. In all cases, if you have tax related assets that affect any of the years under review they can look back to all of the years that are affected (e.g. if you have a rental property and looking at ACB sale calculation on your current tax return that was purchased in 1990 they could request information about the property back to 1990) so keep a permanent file for your assets!

If you would like CRA’s official view on how long you should keep your income tax records … check out their Information Bulletin and Circular
IC78-10R4 – Books and Records Retention/Destruction

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