Canadians file more than 26 million individual income tax and benefit returns each year, and all are electronically analyzed. Based on this analysis, CRA selects certain returns for review because they are high-risk. Other returns are selected based on a random sample used to measure non-compliance for all taxpayers.
CRA has four main review programs:
- Pre-assessment Review Program Processing
- Review Program
- Matching Program
- RRSP Excess Contribution Review Program
Applying the Pre-assessment Review Program, the CRA electronically analyzes returns to identify situations that represent a higher risk of tax loss.
After a notice of assessment is issued, returns go through the Processing Review Program where they are reviewed to make sure that certain claimed deductions and credits are accurate and are supported by appropriate documentation.
The Matching Program makes sure that information slips filed by a third party, such as an employer or a bank, correspond to the information the taxpayer reported. All returns are matched to third-party information slips. Through the RRSP Excess Contribution Review Program, the CRA identifies taxpayers with potential registered retirement savings plan (RRSP) excess contributions and communicates with them to review their situation.