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What Happens if You Make a Mistake on Your Taxes in Canada

It happens all the time to individuals and business owners when filing their taxes. There are so many fields and boxes to fill out and so many different locations that require you to enter information that it’s too easy to enter it on the wrong line or to forget to include something in their return.

This is the reason why if you make a simple mistake, the CRA will correct it for you and reassess your return  – which may even result in a refund.

However, there are individuals who constantly neglect their tax duties on purpose, and they get no help. Whether you are an individual with multiple tax obligations or a business owner, sleep better at night and focus on more lucrative tasks when you partner with the best tax accountant in Toronto. You’ll never have to worry about missing a deadline or a deduction.

What Should I do When I Realize I Made a Mistake on My Return?

The best thing to do the moment you realize your mistake is to make a note for yourself so that you don’t forget to request a change to your return. Unfortunately, there is nothing you can do after you submit your claim. If this is your first mistake, it is unlikely that you will have to undergo a tax audit.

Do not file another return; you must wait until you receive your Notice of Assessment before you can request a change to your return. You can make change requests to your returns going back as far as 10 years; however, you can only request one change per request, i.e., you can not send in a request for multiple changes.

Requesting a Change to Your Return

When you receive your Notice of Assessment, you can make a request to change your return by one of three methods, using your CRA MyAccount online portal, using ReFile if you filed your return electronically or by mail.

A man staring at his laptop in shock

Using MyAccount

If you have registered with MyAccount, you are able to access your tax and CRA info as well as make changes to your account.

One of the services available through your MyAccount portal is “Change my return” (CMR).CMR was recently updated to be more interactive. When you enter Change my return, it may ask you questions or make statements if it detects errors, and you will not be able to proceed until they are resolved.

You are not able to use Change my return to request changes for:

  • Unassessed tax returns
  • A tax return that was subject to 8 reassessments in the same tax year
  • A bankruptcy return
  • A return filed prior to a bankruptcy return
  • Carryback amounts
  • A return filed for an international or non-resident client even if they are deemed to be Canadian Residents, newcomers to Canada or an individual filer who left Canada during the year.
  • An elected split-pension amount
  • A return that has income from a business with a permanent establishment outside of your province or territory of residence (you are required to file a Form T22033, Provincial and Territorial Taxes for Multiple Jurisdictions)
  • A return filed the CRA under subsection 152(7)

You must request a change of return by mail for any of the above situations.

Using ReFile

You can use ReFile to request a change to an assessed return that was filed electronically within the last four years through NETFILE  and EFILE; however, there are exceptions. You can learn more about ReFile at their website.

If you request a change to a return online, you are asked to keep copies of all your paperwork and supporting documents in case you are asked to provide them by the CRA.

The processing time for an online request can take two weeks and up to eight weeks for requests sent by mail. If you are owed a refund, it should be included in your reassessment. Processing times can take longer for more complicated requests.

What Happens if You Make a Mistake that Will Result in CRA Penalty?

For situations where you make a mistake or omission that would result in a penalty,  the CRA created the  CRA voluntary disclosure Program (VDP). The VDP gives taxpayers a chance to fix mistakes they made on a previously filed return or to file a tax they should have in a previous year but didn’t.

The VDP has two streams; one is for income tax disclosures. The other is for GST issues.

VDP Under the Income Tax Stream

Income tax applications to the VDP are processed under two tracks:

  • the general program
  • the limited program

How Does Someone Make the General Program?

The decision on which track an application will fall is made on a case-by-case basis.

The General program

The general program is intended for taxpayers who want to fix their mistakes and, as such, is more lenient. For example, if , like late tax filing for example, If an application is accepted into this track, the taxpayer is not at risk of penalty or prosecution. In fact, they may even be granted a temporary, partial interest relief.

The Limited program

The general program is used for taxpayers who intentionally refused to pay their tax obligations and limits the relief available for them.

A taxpayer is accepted to this program will not be referred for criminal prosecution, or fined with gross negligence penalties, but may be charged other penalties if applicable. People in this track do receive interest relief.

The CRA considers the following factors when assessing whether a person should be accepted into the limited program:

  • Did the applicant make efforts to avoid detection through offshore vehicles.
  • The amount of money involved
  • The amount of time involved.
  • The sophistication of the taxpayer

The existence of one or more of these factors does not automatically disqualify the taxpayer from the program.

GST/HST stream

Similar to the income tax stream. GST registrants and taxpayers Registrants and other taxpayers required to report GST/HST, apply to this stream of the VDP. This program provides taxpayers the opportunity to voluntarily correct inaccurate or incomplete GST information, or disclose any information that should have been reported initially but was not.

Applications under this stream of the VDP have processed in one of three categories: (1) the wash transactions program, where one party may have reported, and another has not; (2) the general program; and (3) the limited program, similar to the income tax limited program. The determination of which category the application will be processed is based on a case-by-case assessment

Executors and Powers of Attorney

If you are acting under a Power of Attorney or as an executor and notice that taxes have not been reported properly, you can apply on behalf of the grantor or deceased to the CRA’s VDP. limited program.

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Pro Tip

ACCESSING THE SMALL BUSINESS DEDUCTION IN YOUR BUSINESS

The Small Business Deduction gives businesses a tax deduction on the first $500,000 of income. This saves an eligible corporation around up to $50,000 in income taxes. There are a number of conditions that have to be met to be eligible for this deduction.

I was referred to Mr. Faris by another professional who recommended him to deal with my multiple years of outstanding corporate and tax returns. I interviewed Sam and was impressed in his confidence and transparency. He did not promise the moon just to get my business. Sam was able to file all returns under the voluntary disclosure program. After completing filling all tax returns, I realized the amount of money he saved me. I enjoyed very much working with him. He ensured that the work progress flow smoothly without any complications. He took to consideration the emotional stress factor and he was available to speak with me even beyond business hours just to make me more calm and to make me feel that he is on top of the matter and it will be resolved to my satisfaction. Indeed, this is what happened. The matter was resolved to my satisfaction and CRA concluded that the returns which Sam filed are reasonable and there is no need to further audit me nor my company. In summary, Sam is a life saver. He saved me and saved my family and now I am in the right track where all my tax filing obligations are met and I don’t owe any taxes. So grateful to Sam and his dedication while working on my file.
Response from the owner:Raj Thank you for the positive Google review. We are happy that you are satisfied with our services. Voluntary disclosure program is one of our specialties and we have dealt with many complex cases too. We get referrals from other professionals as we have been in the business of fighting CRA many years and we have countless success stories that many professionals are aware of. Please do contact us if you require further help in the future.
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Response from the owner:Dear Sir It was a pleasure working on your file and get you the results that you aimed to have and to your satisfaction. We have been dealing with similar cases for many years and we were confident that the results are favorable. Please feel free to contact us in the future if you do require further help.
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Response from the owner:Dear Tanya Thank you for the 5 stars Google review and your kind words. We strive to provide the best customer service and make our clients relax and calm during the process. The cases we are taking are very sensitive so providing quality work to the CRA is extremely important so just to avoid any escalation and to make sure that our package is accepted from the first round. We will remain at your disposal anytime you require our services. Sam Faris
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Response from the owner:Dear Jay Thank you for the 5 stars positive review. Working with you was pleasant too. Many thanks for your business and please do feel free to contact me if you have any questions. Sam Faris
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Response from the owner:Many thanks for the positive review.
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Response from the owner:Many thanks.
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Response from the owner:Thank you Paul for your positive feedback and we are glad we met your expectations.
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Response from the owner:Thank you Sara for the 5 stars review.