The CRA’s Matching Program – Mismatch and You May be Assessed a 20% Penalty

The Matching Program

The CRA’s matching program catches the non-reporting of income every fall. Each year the CRA checks the T-slip information in its database against Canadian taxpayer’s income tax returns to ensure the T-slip income reported matches. Where the income filed by a taxpayer does not match the CRA’s database records, an income tax reassessment is mailed to the taxpayer asking for the income tax due. If the taxpayer is a first time offender, they are just assessed the actual income tax owing and possibly some interest. If this is the second occurrence in the last four years, a 20% penalty of the unreported income is assessed.

The Penalty Provision

Under Subsection 163(1) of the Income Tax Act, where a taxpayer has failed to report income twice within a four-year period, he/she will be subject to a penalty. The penalty is calculated as 10% of the amount you failed to report the second time. A corresponding provincial penalty is also applied, so the total penalty is 20% of the unreported income. 

According to an article by Tom McFeat of CBC News, the number of Canadians penalized for this repeated failure to report income totaled over 81,000 in 2011 with an income tax cost of slightly over $78,000,000.

Tax Tip for T-slips Received after You Filed Your Return?

If you received a T-slip after filing your tax return and ignored the slip since it was a small amount, dig it out tonight and file a T1 adjustment as soon as possible before the matching program gets you. Even a small $10 missed slip will start your clock ticking for a potentially larger penalty if you miss reporting income again in the subsequent three years.

http://www.thebluntbeancounter.com/2013/09/the-cras-matching-program-mismatch-and.html

 

Comments are closed.

Contact Us

Padgett Business Services

1511 10 Street SW Calgary, AB T2R 1E8
Phone: (403) 220-1570

Email: Padgett Calgary

Subscribe to our SMALL BIZ BUILDER Newsletter.
Yes Please!

Our Rating

Click for the BBB Business Review of this Accountants - Certified Public in Calgary AB

Follow us