MONTREAL CPA FIRM NEAR YOU: HOW TO HANDLE A CRA REVIEW OF EXPENSES AND CREDITS

Understanding CRA Pre-Assessment and Post-Assessment Reviews

CRA regularly reviews expenses and credits to verify accuracy. These reviews are not full audits but targeted requests to confirm deductions such as employment expenses, business expenses, donations, medical claims, tuition credits, childcare, rental expenses, or GST/HST/QST input tax credits. Montreal CPAs help clients interpret review letters, understand what triggered the request, and prepare compliant responses.

Why CRA Selects Returns for Review

CRA uses automated matching systems, risk-assessment algorithms, and data from third parties to flag inconsistencies. Reviews may occur when:

• Reported expenses exceed norms for your industry or income level

• Third-party slips do not match the return

• Credits appear unusually high

• A previous review identified errors
  Montreal CPAs help clients understand the risk factor behind the review to tailor a precise response.

Identifying the Items Under Review

CRA review letters specify exactly which amounts or claims require proof. Montreal CPAs assist clients in identifying:

• The specific line items questioned

• The supporting documents required

• The statutory authority behind the review (Income Tax Act or Excise Tax Act)
  Understanding the exact focus ensures accurate preparation and speeds up resolution.

Gathering Strong Supporting Documentation

Successful reviews depend on proper documentation. Montreal CPAs help clients assemble:

• Receipts

• Invoices

• Cancelled cheques

• Contracts

• Mileage logs

• Medical certificates

• Donation receipts

• Tuition statements

• Childcare invoices
  Proper organization demonstrates credibility and reduces follow-up requests.

Verifying Eligibility Before Submission

Submitting documents that do not meet CRA standards can result in denial or reassessment. Montreal CPAs verify:

• Whether expenses meet statutory criteria

• If documentation is valid and complete

• Whether amounts align with business or personal use
  This step prevents errors that could lead to penalties or future audits.

Drafting a Clear and Professional Response

CRA reviews require concise, factual responses. Montreal CPAs prepare letters that:

• Address each item requested

• Explain the rationale for the claim

• Reference supporting documents in logical order

• Demonstrate compliance with the Income Tax Act
  A professionally drafted response strengthens your position and minimizes escalation.

Understanding Common CRA Review Areas

Certain expenses and credits trigger reviews more often:

• Work-from-home expenses

• Travel and vehicle expenses

• Medical expenses

• Donations

• Tuition credits

• Moving expenses

• GST/QST input credits for self-employed individuals
  Montreal CPAs help clients navigate these high-review items with clarity and precision.

Avoiding Common Mistakes During Reviews

Frequent errors that lead to denial include:

• Missing receipts

• Providing wrong documentation

• Submitting personal expenses as business expenses

• Failing to provide mileage logs

• Inconsistent explanations
  Montreal CPAs guide clients to avoid these pitfalls and preserve their deductions.

Responding Within Deadlines

CRA review requests include strict deadlines. Missing them can result in automatic denial of expenses and reassessment. Montreal CPAs manage timelines, prepare submissions quickly, and ensure all documents are delivered on time.

What Happens if CRA Rejects Your Documentation

If CRA disallows expenses or credits, they will issue a Notice of Reassessment. Montreal CPAs help clients:

• Understand reasons for denial

• Identify missing or weak documentation

• Prepare a stronger resubmission

• File a formal objection when warranted
  This protects your rights and ensures CRA reviews decisions fairly.

Escalating to a Notice of Objection

If a review leads to incorrect tax adjustments, clients may dispute the outcome. Montreal CPAs prepare objections supported by:

• Legal references

• Financial calculations

• Properly organized evidence

• Clear arguments based on statutory definitions
  Strong objections improve the chances of reversal.

Preventing Future CRA Reviews

Many CRA reviews are avoidable through better tax practices. Montreal CPAs implement preventive measures such as:

• Audit-proof recordkeeping

• Separating personal and business expenses

• Maintaining contemporaneous logs

• Keeping digital backups

• Filing consistent and accurate returns
  Prevention helps reduce scrutiny and stress.

Using Digital Tools to Track Documentation

Digital recordkeeping tools simplify compliance. Montreal CPAs help clients use:

• CRA My Account & My Business Account

• Revenu Québec ClicSÉQUR

• Cloud bookkeeping platforms

• Receipt scanning software
  These tools reduce errors and speed up CRA review responses.

Maintaining Compliance During the Review Process

Even during a CRA review, ongoing tax obligations continue. Montreal CPAs ensure clients stay compliant with:

• GST/QST filings

• Source deductions

• Instalment payments

• Corporate filing deadlines
  Proper compliance protects credibility and prevents new issues from arising.

Why Choose Mackisen

With more than 35 years of combined CPA experience, Mackisen CPA Montreal helps businesses stay compliant while recovering the taxes they’re entitled to. Whether you’re filing your first GST/QST return or optimizing multi-year refunds, our expert team ensures precision, transparency, and protection from audit risk.