A middle-aged businesswoman sits at her desk in front of a computer and rubs her head in frustration.

Why Talking To The CRA Can Give You A Tax Headache

December 16, 2019

Many taxpayers receive requests for information from the Canada Revenue Agency. Often the requests are for something simple, like supporting documents for your claim for charitable donations or medical expenses. But sometimes, the requests are in the form of a lengthy questionnaire, a request for a meeting, or perhaps a telephone call[1]

You may be tempted to deal with the matter yourself rather than getting your accountant or tax advisor involved, however doing so can often cause problems.

While Canada’s tax laws are written in the English (and French) language, the words and phrases used in those laws are loaded with meaning that is not apparent to the average Canadian. If you don’t speak “tax”, then you may unintentionally communicate the wrong message to the CRA. Once this has occurred, it is very difficult to convince the CRA that their interpretation of your words is not what you meant.

Phone calls or meetings with the CRA can also cause problems because there is no accurate record of what was said. The CRA’s goal for the call or meeting is to get information that will support their assessment. This unconscious bias can make them more likely to misinterpret what you tell them or to only record information that supports their assessment in their notes, and less likely to record information that does not support their assessment. Once something has been recorded in the CRA’s notes, it is very difficult to convince them that their notes are incorrect or incomplete.

If the CRA contacts you, you should not provide them with any information, and instead ask them to deal with your tax professional. Some CRA agents get frustrated by this approach and may badger you[2]. If this occurs, remind them that under the Taxpayer Bill of Rights “You have the right to be represented by the person of your choice[3]” and do not give them any information.

The best way to communicate with the CRA is in writing. This ensures that there is an accurate record of the information provided to the CRA. If the CRA’s requests were received verbally (e.g. in a phone call), state your understanding of the request, and then provide your written response. This gives context to your response and ensures that it can’t be misused by the CRA. Any written communication with the CRA should be prepared by, or at least reviewed by a tax professional. Contact your DMCL advisor any time you need advice on how to talk to the CRA.

[1] It’s been well documented in the media that scam artists are contacting Canadians and claiming to be calling from the Canada Revenue Agency. Therefore, you should never assume that someone claiming to be calling from the CRA is actually an employee of the CRA.

[2] e.g. “Why can’t you answer this simple question?”

[3] https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/rc17/taxpayer-bill-rights-guide-understanding-your-rights-a-taxpayer.html#toc18