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Dale Jackson

Your Personal Investor

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This weekend’s Canada Revenue Agency website failure could be a blessing in disguise for some. It presents another chance to review your return and be sure there are no red flags that could trigger an audit.

CRA software is designed to pick up on peculiarities. The following is a collection of red flags from tax experts.

  • Not filing: The CRA knows where you live and has extraordinary legal powers to ensure you pay your income tax. Not filing is not an option. Even an incomplete or incorrect return is better. 
  • Ignoring the CRA's requests for further information is another cardinal tax sin. You may be asked to submit a receipt for a claim. If the taxpayer does not respond on a timely basis or is unable to provide adequate support for a claim, the CRA will issue a reassessment -- perhaps denying a claim completely.
  • Large or unusual changes in deductions or credits. The CRA's computers like consistency. If you have a major change in deductions or credits be sure you have supporting documentation.
  • Claiming big home office deduction. If you work from home there are a lot of grey areas when it comes to separating work use from personal use in your home. Technically, the portion you can deduct as a business is based on the square footage of the home but some tax experts suggest leaving it at one-fifth for the sake of consistency.
  • Claiming 100 per cent business use of a vehicle. Like a home office, if you use your own vehicle for work you can only claim the portion used for work and not the portion for personal use. Even driving from home to the workplace is considered personal use.
  • Not reporting income from a T-slip. The CRA has your T-slips on file before you even get them. Be sure to include all income from all slips.