Received a Letter From the CRA? What to Do Next

Receiving a letter from the Canada Revenue Agency can be stressful, especially when it asks for documents, questions a deduction or shows a balance you weren't expecting.

The most important thing to understand is that not every CRA letter means you're being audited or accused of doing something wrong. The CRA sends correspondence for many reasons, including routine reviews, requests for supporting documents, notices of assessment, account balances and changes made to previously filed returns.

However, even a routine request can become more serious when it's ignored. If you receive a letter from the CRA, read it carefully, confirm that it's genuine and take note of any response deadline. This guide explains what common CRA letters mean, what documents you may need and when it may be helpful to involve an accountant.

First: Do Not Panic, but Do Not Ignore It

A request to review part of your tax return is not automatically an audit. The CRA conducts review programs to confirm that income, deductions and credits were reported correctly and can be supported with appropriate records. According to the CRA, most income tax reviews are routine checks rather than full audits — the agency may simply ask for receipts, invoices, statements or other documents supporting a particular amount on your return.

1. Confirm That the Letter Is Genuine

Before sending personal information or making a payment, verify that the communication actually came from the CRA. Start by signing into CRA My Account for personal taxes or My Business Account for corporate, payroll and GST/HST matters. Don't use a link from an unexpected text message or email — access the CRA through the official Government of Canada website instead.

If someone claiming to be from the CRA calls you unexpectedly, ask for:

• Their full name
• Their telephone number
• Their office location
• The department or program they represent
• A reference or case number, when available

End the call and verify the information independently before providing sensitive information. Warning signs of a scam may include someone who threatens immediate arrest, demands payment using gift cards or cryptocurrency, pressures you to pay immediately, requests unrelated banking information, refuses to let you verify their identity, or sends an unexpected link requesting your CRA login credentials.

2. Identify What Type of CRA Letter You Received

The next step is to determine what the letter actually means — different types of correspondence require different responses.

Notice of Assessment

A Notice of Assessment, commonly called an NOA, is the CRA's summary of a processed income tax return. Most taxpayers receive one after filing. It shows whether you're receiving a refund, have a balance owing, have no amount payable or refundable, had an amount changed, or have unused credits or contribution room. Receiving an NOA is a normal part of filing a tax return and doesn't necessarily indicate a problem.

Notice of Reassessment

A Notice of Reassessment is issued when the CRA changes a tax return that was previously assessed — this might result from information submitted after the original return, a CRA review, a corrected tax slip, an audit, a request made by the taxpayer, or information received from another source. Compare the reassessment with your original return and read the explanation of changes.

Request for Supporting Documents

The CRA may ask for documents supporting one or more items on a personal or corporate tax return. Commonly reviewed items include:

• Employment expenses
• Medical expenses
• Charitable donations
• Tuition amounts
• Moving expenses
• Rental-property expenses
• Self-employment expenses
• Foreign tax credits
• Dependant-related credits
• Business expenses
• GST/HST input tax credits

The letter should identify the tax year, the amount being reviewed, the documents requested and the deadline for responding.

GST/HST or Payroll Review

Business owners may receive correspondence relating to GST/HST returns, input tax credits, payroll remittances, T4 or T5 slips, employee-versus-contractor classifications, unfiled returns, or amounts collected but not remitted. These requests may involve several reporting periods rather than a single tax year.

Audit Notice

A formal audit is more extensive than a routine review. During a business audit, the CRA may examine accounting records, invoices, receipts, contracts, bank statements, payroll information, tax returns and electronic bookkeeping data. The CRA normally identifies the auditor, explains which years or reporting periods are being audited and provides instructions for supplying records.

Payment or Collections Letter

A letter may also relate to a balance already assessed rather than a review of the return itself — check whether it refers to personal or corporate income tax, GST/HST, payroll deductions, interest, late-filing penalties, instalments, or a previous payment that hasn't been applied as expected. Before paying, compare the letter with your CRA account and your own payment records.

3. Record the Deadline and Tax Period

CRA correspondence normally identifies a deadline for responding. Write down:

• The date of the letter
• The response deadline
• The relevant tax year or reporting period
• The reference or case number
• The name and number of the assigned CRA contact
• The particular deduction, credit, return or account being reviewed

Don't assume the letter concerns your most recent return — a request may relate to an earlier year, a specific GST/HST reporting period or several corporate fiscal years. If you can't meet the deadline, contact the number shown on the letter as soon as possible. An extension isn't automatic, so keep a record of when you called, whom you spoke with and what was agreed upon.

4. Read Each Request Carefully

CRA letters sometimes contain several numbered requests. Respond to each item separately rather than sending a large group of documents without an explanation. For every requested item, identify what amount was reported, where it appeared on the return, how it was calculated, which document supports it, and whether any explanation is required.

For example, if the CRA is reviewing vehicle expenses for a self-employed individual, it may not be enough to provide fuel receipts — the agency may also need information about total kilometres driven, business kilometres, the purpose of business trips and how the business-use percentage was calculated.

5. Gather the Supporting Documents

Personal tax documents

• T4, T4A, T5 or other information slips
• Medical receipts
• Donation receipts
• Tuition documents
• Employment-expense forms
• Childcare receipts
• Moving-expense records
• Rental-income statements
• Investment records
• Foreign income and foreign tax documents
• Proof of payment

Self-employment and business records

• Sales invoices and expense receipts
• Bank and credit-card statements
• General ledgers, journals and trial balances
• Contracts and supplier invoices
• Payment-processor reports
• Mileage logs and vehicle purchase or lease documents
• Payroll reports and GST/HST working papers
• Loan statements and financial statements
• Electronic accounting records

6. Organize the Response Clearly

A well-organized response can make it easier for the CRA officer to understand your position and match each document to the request. Consider including a brief cover letter, your name or business name, the tax year, the CRA reference number, a numbered response corresponding to each request, a short explanation of any calculations, and clearly labelled supporting documents.

7. What If You Cannot Find Every Receipt?

Missing records shouldn't be ignored or replaced with invented information. First, try to obtain replacement documents from banks, credit-card providers, suppliers, medical providers, charities, employers, educational institutions, payment processors or accounting software. A bank or credit-card statement may help demonstrate that a payment occurred, but it may not always prove what was purchased or whether the expense qualified.

If a requested document is unavailable, explain that honestly, provide any alternative evidence you have, and describe the steps taken to obtain the original record.

8. Understand the Difference Between a Review and an Audit

A review can sometimes expand when the documents reveal additional issues, but receiving a review letter does not mean that a full audit will follow.

9. What Happens After You Respond?

After reviewing your response, the CRA may accept the information and make no changes, request additional information, allow part of the original claim, remove or reduce a deduction, adjust reported income, recalculate GST/HST or payroll amounts, or issue a Notice of Reassessment. The result should be communicated in writing — read the explanation carefully and compare the final figures with the response you submitted.

10. What If You Disagree With the CRA?

A CRA decision is not necessarily the end of the process. Begin by reviewing the explanation and contacting the CRA officer or department responsible. Some disagreements result from missing information, unclear documents or a calculation that can be corrected without a formal dispute.

A formal objection should explain which assessment you dispute, which amounts you believe are incorrect, why you disagree, the relevant facts, the supporting documents, and the outcome you're requesting. An accountant can help identify the accounting and tax issues involved — more complex legal disputes may also require advice from a tax lawyer.

11. When Should You Contact an Accountant?

You may be able to respond to a straightforward request yourself when the documents are available and the issue is easy to understand. Professional assistance may be particularly helpful when:

• The amount involved is significant
• Several tax years are being reviewed
• The letter concerns a corporation
• The request involves GST/HST or payroll
• Your bookkeeping is incomplete
• Business and personal expenses were mixed
• You cannot reproduce the amount originally filed
• The CRA has proposed a reassessment
• Penalties or interest are involved
• You disagree with the CRA's interpretation
• The matter has progressed to an audit
• You have unfiled returns
• The requested records are extensive
• An objection deadline is approaching

An accountant can review the letter, reconcile it with the filed return, identify missing documents, prepare a structured response and explain the accounting treatment. With your authorization, a representative may also be able to communicate with the CRA and access relevant account information — though you remain responsible for the accuracy of your tax information even when an accountant assists you.

Common Mistakes to Avoid

Ignoring the letter

Not responding can lead the CRA to make a decision using only the information already available.

Assuming every letter is an audit

A routine review is more limited than an audit. Understanding the type of request helps you prepare an appropriate response.

Missing the deadline

Contact the CRA before the deadline if you need additional time.

Sending disorganized documents

A large collection of unlabelled receipts may delay the review and make it difficult to understand how your claim was calculated.

Recreating records without an explanation

Do not present estimates or reconstructed information as original documents. Clearly identify how any reconstructed amount was calculated.

Paying a suspicious caller

Verify unexpected communications independently before sending money or personal information.

How Better Records Can Reduce Future Problems

Good bookkeeping doesn't guarantee that the CRA will never review a return, but it can make responding much easier. Businesses should maintain records that clearly show income earned, expenses incurred, GST/HST collected and paid, payroll amounts, business use of vehicles and other assets, and the calculations used on tax returns.

CRA Letter and Audit Assistance in Burlington and the Surrounding Area

Accounting Masters Group Inc. assists individuals, self-employed workers and owner-managed businesses with tax preparation, bookkeeping, CRA correspondence and accounting matters. The firm is based in Burlington and serves clients from Oakville, Mississauga, Milton, Hamilton, Halton Region and the western Greater Toronto Area.

• Reviewing CRA correspondence
• Comparing the request with the filed return
• Identifying the required records
• Reconciling bookkeeping information
• Preparing supporting schedules
• Organizing a response
• Assisting with outstanding tax returns
• Addressing GST/HST or payroll questions
• Supporting clients during a CRA review or audit
• Explaining a Notice of Assessment or Reassessment