Tax Tidbits: CRA Complaints, AI Audits and Record Keeping

Several shorter developments this quarter provide a useful glimpse into how CRA administration and enforcement are evolving.

CRA Service Complaints Are Rising

The Office of the Taxpayer's Ombudsperson reported a surge in CRA complaints. Common concerns include:

• Delays and poor information from CRA telephone contact centres
• Delays processing T1 adjustments
• Delays responding to service complaints
• Collection activity
• Difficulties accessing CRA online accounts after taxpayers have been locked out

CRA Is Using AI to Identify Unusual Returns

CRA is using artificial intelligence tools designed to identify taxpayers whose filings differ from industry norms and historical filing patterns.

This does not necessarily mean that an unusual tax position is incorrect. However, a return that differs significantly from expected patterns may face additional scrutiny even where the taxpayer has documentation supporting the position taken.

Poor Records Can Be Expensive

In a recent court case, a taxpayer's record keeping was found to be so unreliable that GST paid on subcontractor fees was not allowed as an input tax credit.

Action: Keep accounting records current, organized and well supported. As CRA develops more sophisticated compliance systems, reliable documentation becomes increasingly important.