Common Tax Mistakes to Avoid – A Complete Guide by a Montreal CPA Firm Near You

Every year, thousands of Canadians make avoidable tax filing errors that lead to

reassessments, penalties, delayed refunds, or full CRA audits. Many of these mistakes

seem small—forgetting a slip, claiming an ineligible deduction, or entering a number

incorrectly—but CRA’s automated systems catch discrepancies quickly. Understanding

the most common tax mistakes in Canada can help taxpayers protect themselves, avoid

penalties, and maintain compliance with CRA rules. Whether you are an employee, self-

employed, a landlord, a student, or retired, filing accurately is essential to prevent

unexpected tax bills and CRA scrutiny. This guide explains the most common tax

mistakes Canadians make, why they happen, how CRA detects them, and how to avoid

them entirely.

Legal and Regulatory Framework

Under section 150 of the Income Tax Act, every taxpayer must file a complete and

accurate return. CRA enforces strict standards for reporting income, deductions, and

credits. Income must be reported under section 3, deductions must follow specific rules

in sections such as 8, 20, and 63, and credits must meet eligibility requirements under

sections 118 and 122. Late filings trigger penalties under section 162, while false

statements may incur penalties under section 163. CRA’s matching program

electronically compares employer T4s, investment slips, pension slips, EI, CPP, T5s,

T3s, T5008s, and other data with taxpayer filings. Any mismatch automatically triggers a

review. Improper use of deductions such as employment expenses or moving expenses

can lead to denial and reassessment. These laws form the compliance framework for

avoiding common tax mistakes in Canada.

Key Court Decisions

Courts have repeatedly confirmed taxpayers’ responsibility for accuracy. In Karam v.

Canada, the court ruled that even if tax slips are delayed or lost, taxpayers must still

report all income. In Radage v. The Queen, CRA denied child care expenses because

documentation was incomplete, and the court upheld the denial. In Plouffe v. Canada,

CRA suspended benefits because taxpayers failed to file properly, and the court

confirmed CRA’s authority. In Boies v. Canada, late-filing penalties were upheld even

when taxpayers argued they misunderstood deadlines. These rulings emphasize that

taxpayers must take all reasonable steps to avoid common filing errors and stay

compliant.

Why CRA Targets This Issue

CRA aggressively targets common tax mistakes because they account for a large

portion of reassessments. Common mistakes include missing T4s or T5s, failing to

report capital gains from investment sales, overclaiming deductions, claiming credits

incorrectly, misreporting rental income, omitting foreign assets, and filing with incorrect

marital status. CRA’s automated matching system identifies missing slips instantly,

triggering reviews. CRA also monitors patterns that suggest aggressive or incorrect

claiming—such as unusually high employment expenses, repeated rental losses, or

large medical claims without documentation. Because small mistakes can indicate

larger issues, CRA scrutinizes returns for errors as a preventive measure.

Understanding common tax mistakes in Canada helps taxpayers prevent CRA

intervention.

Mackisen Strategy

At Mackisen CPA Montreal, we help clients avoid common tax errors by using a rigorous

review and verification process. We begin by collecting all income slips, bank

statements, investment records, rental agreements, and receipts. We cross-check every

slip with CRA’s Auto-fill My Return data to ensure no income is missing. We verify each

deduction and credit for eligibility, reviewing documentation and CRA rules. For self-

employed and rental clients, we prepare detailed schedules and reconcile all expense

claims. For clients with foreign property, we ensure accurate T1135 filing. Before

submitting returns, we run internal audit checks to catch errors that might trigger CRA

reviews. Our structured approach prevents mistakes and ensures accurate and

compliant filings.

Real Client Experience

A client missed several investment slips because they held small accounts at multiple

banks. CRA reassessed them for unreported income. We consolidated their accounts,

corrected the returns, and prevented future issues. Another client claimed large

employment expenses without Form T2200. CRA denied the deduction. We corrected

the return and educated the client on proper requirements. A landlord failed to report

rental income from Airbnb because payments were mixed with personal transfers. We

reconstructed rental income and filed corrected returns before CRA intervened. In a

fourth case, a retiree wrongly claimed disability credits without proper medical forms.

We corrected the mistake and avoided penalties. These examples show how common

tax mistakes in Canada can lead to financial stress—and how professional guidance

prevents them.

Common Questions

Taxpayers often ask whether CRA audits all mistakes. Not every mistake leads to a full

audit, but errors almost always trigger a review. Others ask whether CRA will notify

them of missing slips. CRA generally reassesses automatically, sometimes without

notice. Taxpayers also ask whether mistakes can be corrected. Yes—returns can be

adjusted using CRA My Account or a T1-ADJ. Another question is whether CRA

penalizes honest mistakes. While penalties for minor errors are rare, gross negligence

penalties may apply when CRA determines taxpayers should have known better. These

questions highlight why understanding common tax mistakes in Canada is essential.

Why Mackisen

With more than 35 years of combined CPA experience, Mackisen CPA Montreal helps

Canadians file accurate, compliant tax returns while avoiding the most common and

costly mistakes. Whether you need a full review, a multi-year correction, or audit

defense, our expert team ensures precision, transparency, and protection from audit

risk.