As tax returns are being prepared, many taxpayers are discovering, sometimes too late, issues that could have been avoided by simple preventive measures. Whether it’s missed communications with the tax authorities or documents that can’t be found at the right time, these situations can lead to delays, penalties and even unfavourable assessments.
In this context, it is particularly relevant to recall certain essential good practices to reduce risks and approach tax season with greater serenity. Electronic communications from the Canada Revenue Agency, as well as the rules surrounding the retention of tax documents, are key elements to master in order to avoid unnecessary financial and administrative consequences.
Communications from the Canada Revenue Agency (CRA)
The Canada Revenue Agency now prefers to correspond electronically with all taxpayers through the mailbox accessible from “My Account”. However, this method may cause difficulties for taxpayers who are not registered with “My Account” or who do not have access to their personal or company profile.
For example, in situations where the CRA requests additional information about taxpayers’ tax obligations, taxpayers are not informed of the requests. As a result, they may be penalized.
To mitigate these risks, we recommend that you register with the CRA portal as soon as possible, or authorize a representative to act on your behalf, so that you can be informed of all communications issued by the tax authorities.
Electronic communications from Revenu Québec
Revenu Québec is also making increasing use of electronic communications, notably through “Mon dossier pour les citoyens” and “Mon dossier pour les entreprises”. Notices, letters and requests for information can thus be deposited directly in the taxpayer’s online file, without having to send them by post.
To reduce the risks associated with the transition, we strongly recommend that you also register for “My Account” and ensure that your contact details, including e-mail address, are up to date. It is also possible to authorize a representative to access the file to ensure rigorous, ongoing follow-up of communications issued by Revenu Québec.
The importance of keeping your tax documents
As a general rule, documents must be kept for at least six years. This rule is essential and required at both federal and provincial levels.
However, some situations require that documents be kept for a much longer period. For example, if you own a building, all original documents (deed of purchase, invoices for work, etc.) must be kept for a period of 6 years following the year in which the property was disposed of. Tax authorities may ask you to provide invoices, legal deeds or other relevant documents as part of an audit.
If you are unable to provide these documents, either because they are too old or because you have failed to keep them, the tax authorities may assess you for amounts you are unable to justify.
Adopting good practices now, both in following up on communications from the Canada Revenue Agency and in keeping tax documents, can help avoid many complications. When it comes to tax preparation, prevention is the best way to reduce the risk of penalties and unexpected assessments. Our professionals are available to assist you in the event of disputes with tax authorities.
An article by our tax team
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