By the time summer arrives, the deadline for filing an individual income tax return for the previous year has come and gone for all individual Canadians. The majority of taxpayers were required to file that return for 2025 on or before April 30, 2026, while self-employed individuals (and their spouses) had until June 15, 2026 to complete that filing obligation. And, given the time frame during which the Canada Revenue Agency processes such returns and issues a Notice of Assessment, it’s likely that most if not all of those taxpayers have received their Notice of Assessment and concluded that their annual filing and payment obligations are done and behind them for another year.
For most taxpayers it is therefore surprising to receive a communication from the CRA in mid-summer, and more than a little unsettling to find out that the Agency has some further questions about the tax return that the taxpayer thought was already completed. Notwithstanding, that’s an experience that millions of taxpayers will have over the next few weeks and months.
Between February 6th and June 14 of this year, the Canada Revenue Agency received and processed just under 32 million individual income tax returns filed for the 2025 tax year, and issued a Notice of Assessment in respect of each one of those returns. The sheer volume of returns and the processing turnaround timelines mean that the CRA does not (and could not possibly) do a manual review of the information provided in a return prior to issuing the Notice of Assessment. Rather, returns are scanned by the Agency’s computer system and a Notice of Assessment is then issued.
In addition, the CRA has, for many years, been successful in encouraging taxpayers to fulfill their filing obligations online, through one of the Agency’s electronic filing services. This year, just under 30 million (or 93%) of individual returns for 2025 were filed by electronic means. While e-filing means that the turnaround for processing of returns is much quicker, there is, by definition, no “paper trail” involved.
The Canadian tax system has always been what is termed a “self-assessing” system, in which taxpayers report income earned and claim deductions and credits to which they believe they are entitled. Prior to the advent of e-filing there were means by which the CRA could easily verify claims made by taxpayers. Where returns were paper-filed, taxpayers were usually required to include receipts or other documentation to prove their claims, whatever those claims were for. For the 94% of returns which were filed this year by electronic means, no such paper trail exists. Consequently, the potential exists for misrepresentation of such claims (or simple reporting errors) on a large scale.
The CRA’s response to that risk is to conduct a wide range of review programs (there are, in fact, no fewer than eight separate tax return review programs utilized by the Agency), to ensure that information reported on each return was accurate and claims made for deductions and credits were justified. Some review programs are carried out before a Notice of Assessment is issued for the taxpayer’s return, and others after that Notice of Assessment has been issued and sent to the taxpayer. Regardless of the timing and the review program under which the review is carried out, in all cases the purpose of the review is to ensure that income amounts reported are complete and accurate and that deduction and tax credit claims made on the return can be verified by receipts or other documentation.
Being selected for review under any of the CRA’s review programs means, for the individual taxpayer, the possibility of receiving unexpected correspondence, or a telephone call, from the CRA. Receiving such correspondence or such a call from the tax authorities is almost guaranteed to worry the recipient taxpayer, who may immediately conclude that they have done something very wrong and are facing a big tax bill. However, in the vast majority of cases, the contact is just a routine part of the Agency’s processing review mandate.
Where the initial contact from the CRA to the taxpayer is done by telephone, it’s important that the taxpayer verify the identity of the person claiming to be a representative of the Agency. As virtually everyone knows by now, fraudulent or “scam” calls purporting to be from the CRA have become commonplace. To assist taxpayers in confirming that any telephone contact received is a legitimate one, the CRA has provided information on how to respond to such a call, and that information can be found on the CRA website at Verify it's the CRA calling - Scams and fraud - CRA - Canada.ca.
Most taxpayers, of course, are not concerned so much with the kind of program or programs under which they are contacted as they are with why their return was singled out for review or follow-up, and there are a number of reasons why that might have occurred.
One of the review programs administered by the CRA is the “Matching Program”, in which information reported on the taxpayer’s return (both income and deductions) is compared to information provided to the CRA by third-party sources (like T4s filed by employers or T5s filed by banks or other financial institutions). Where information provided by such a third party does not agree with the figures reported by the taxpayer on their return, the CRA is likely to want an explanation of the discrepancy.
As well, Canada’s tax laws are complex and, over the years, there are areas in which the CRA has determined that taxpayers are more likely to make errors on their return. Consequently, a return which includes claims in those areas (like dependant tax credit claims and claims for medical expenses, moving expenses, or tuition tax credits) may have an increased chance of being reviewed. Where there are deductions or credits claimed by the taxpayer which are significantly different or greater than those claimed in previous returns, that may attract the CRA’s attention. And, if the taxpayer’s return has been reviewed in previous years and, especially if an adjustment was made following that review, subsequent reviews may be more likely. Finally, many returns are picked for the processing review programs simply on the basis of random selection.
Regardless of the reason for the follow-up, the process is the same. Taxpayers whose returns are selected for review will be contacted by the CRA, usually by letter, identifying the deduction or credit for which the CRA wants documentation or the income or deduction amount about which a discrepancy seems to exist. The taxpayer will be given a reasonable period of time – usually a few weeks from the date of the letter – in which to respond to the CRA’s request. That response should be in writing, attaching, if needed, the receipts or other documentation which the CRA has requested. All correspondence from the CRA under its review programs will include a reference number, which is usually found in the top right-hand corner of the CRA’s letter. That number is the means by which the CRA tracks the particular inquiry, and should be included in the response sent to the Agency. It’s important to remember, as well, that it’s the taxpayer’s responsibility to provide proof, where requested, of any claims made on a return. Where a taxpayer does not respond to a CRA request or does not provide such proof, the Agency will proceed on the basis that the requested verification or proof does not exist and will assess or reassess accordingly.
Taxpayers who have registered for the CRA’s online tax program My Account (or whose representative is similarly registered for the Agency’s Represent a Client online service) can usually submit required documentation electronically. More information on how to do so can be found on the CRA website at Submitting documents online – Pre-assessment Review, Processing Review, Request Verification and Matching Programs - Canada.ca.
Whatever the reason a particular return was selected for review by the CRA, one thing is certain. A prompt response to the CRA’s enquiry, providing the Agency with the information or documentation requested, will, in the vast majority of cases, bring the matter to a speedy conclusion, to the satisfaction of both the Agency and the taxpayer. Detailed information on the return review process can be found on the CRA website at Review of your tax return by the CRA - Canada.ca.