MONTREAL CPA FIRM NEAR YOU: HOW TO RESPOND TO A CRA REQUEST FOR INCOME VERIFICATION

Understanding Income Verification Requests

CRA issues income verification requests when amounts reported on your tax return do not match information provided by employers, banks, investment firms, pension providers, or government agencies. Montreal CPAs help clients interpret these requests, identify discrepancies, and prepare accurate responses to avoid reassessments or penalties.

Why CRA Asks for Income Verification

Income discrepancies can arise for several reasons:

• Missing or late slips (T4, T5, T4A, RL-1, RL-3)

• Incorrect amounts reported by third parties

• Unreported employment income

• Rental or business income mismatches

• Capital gains reporting inconsistencies
  Montreal CPAs analyze the triggers behind the request to determine whether it is routine or indicative of a larger issue.

Identifying the Slips or Income Sources Under Review

CRA letters specify which income items require verification. Montreal CPAs help clients:

• Match requested items to original filings

• Confirm whether slips were included

• Retrieve missing documents

• Identify misreported or duplicated amounts
  Understanding precisely what is being questioned prevents unnecessary back-and-forth with CRA.

Gathering the Correct Supporting Documents

Income verification requires accurate and official documentation. Montreal CPAs assist in assembling:

• T4 employment slips

• T5 investment income slips

• T4A pension or commission slips

• RL-series slips from Revenu Québec

• Bank statements for interest income

• Brokerage statements for capital gains
  Providing complete and organized support reduces the risk of reassessment.

Correcting Missing or Incorrect Slips

Sometimes third parties issue incorrect or amended slips. Montreal CPAs help clients:

• Request corrected slips

• Contact employers or financial institutions

• Obtain missing RL slips from Revenue Québec
  Corrected documentation strengthens the accuracy of the response.

Drafting a Professional Explanation

A clear, concise explanation is essential when responding to CRA. Montreal CPAs prepare letters that:

• Address each discrepancy

• Provide context where needed

• Reference enclosed supporting documents

• Align explanations with tax legislation
  This level of clarity demonstrates credibility and reduces the likelihood of further review.

Understanding Consequences of Unverified Income

If income is not verified properly, CRA may:

• Add unreported income

• Charge penalties for omission or negligence

• Apply daily compound interest

• Initiate broader audits
  Montreal CPAs help clients avoid these consequences by preparing strong, compliant responses.

Handling Employment Income Discrepancies

Discrepancies in T4 amounts are common. Montreal CPAs:

• Reconcile gross income to pay records

• Confirm taxable benefits

• Validate EI, CPP, QPP, and QPIP deductions

• Identify employer reporting errors
  Proper reconciliation helps prevent inaccurate reassessments.

Responding to Investment Income Queries

CRA often reviews interest, dividends, and capital gains. Montreal CPAs verify:

• Accrued vs. received interest

• Dividend gross-up and credit calculations

• Capital gains and adjusted cost base (ACB) accuracy

• Foreign income declarations
  Detailed review avoids incorrect tax increases.

Addressing Business or Rental Income Differences

CRA may question self-employment or rental income when:

• Bank deposits exceed reported income

• Expenses appear inconsistent

• E-commerce transactions lack matching invoices
  Montreal CPAs help clients prepare reconciliations and supporting schedules to satisfy CRA verification requirements.

Submitting Income Verification Within Deadlines

CRA deadlines are strict and can be as short as 15 days. Montreal CPAs ensure:

• Responses are timely

• Documentation is complete

• No deadlines are missed
  Timely action avoids penalties and prevents CRA from making arbitrary adjustments.

What to Do if CRA Disagrees With Your Explanation

If CRA rejects documentation, they issue a reassessment. Montreal CPAs:

• Explain the rationale for the reassessment

• Prepare additional support

• Initiate a formal Notice of Objection if warranted
  Strong objection strategies help protect your rights and reverse incorrect decisions.

Preventing Future Income Verification Requests

Montreal CPAs help clients adopt proactive measures such as:

• Reconciling all slips before filing

• Verifying employer and bank reporting

• Maintaining organized digital records

• Filing consistent financial information across platforms
  Better preparation reduces future CRA scrutiny.

Using CRA and ARQ Digital Portals

Income slips and tax documents often appear on:

• CRA My Account

• CRA My Business Account

• Revenu Québec ClicSÉQUR
  Montreal CPAs help clients navigate these tools to retrieve official documents quickly and ensure accuracy before submitting returns.

Maintaining Full Compliance Throughout the Review

During income verification, taxpayers must continue meeting other obligations such as instalments, GST/QST filings, payroll remittances, and corporate returns. Montreal CPAs ensure ongoing compliance to avoid additional problems during the review process.

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.