Toronto Passions

CRA Desk Audit

Darts

Well-known member
Jan 15, 2017
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11,220
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Anyone here ever experienced a CRA desk audit?

I got an inquiry from them. So, I called and found the people answering the phone polite and respectful but they have a problem going off script.

Long story short. I had entered a capital loss on the wrong line on my tax return. So, I asked the CRA folks on the phone to make the change to the correct line. Instead they issued a re-assessment disallowing the entire loss and incorrectly increased my taxes.
 

JohnHenry

Well-known member
Aug 27, 2003
1,336
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rural ontario
Anyone here ever experienced a CRA desk audit?

I got an inquiry from them. So, I called and found the people answering the phone polite and respectful but they have a problem going off script.

Long story short. I had entered a capital loss on the wrong line on my tax return. So, I asked the CRA folks on the phone to make the change to the correct line. Instead they issued a re-assessment disallowing the entire loss and incorrectly increased my taxes.
File an amended return.
 

Darts

Well-known member
Jan 15, 2017
23,023
11,220
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File an amended return.
I called them and they said to file a "T1 Adjustment" request.

I said what about filing a Notice of Objection? The CRA agent on the phone said that would escalate the issue unnecessarily.

All this time and effort because I originally reported the capital loss on the wrong T1 line. It should ultimately have no effect on the actual taxes.
 

xix

Time Zone Traveller
Jul 27, 2002
4,200
1,419
113
La la land
Yeah , I remember I screwed up one time with one of the agency and they called me 7 years later to have a meeting. This seems to be part of their script. It is almost like they ( Agency) sells these cases to retired employees to solve it and they get a cut.
 

sohappy

Active member
Apr 5, 2004
359
203
43
It isn't a script. It's probably illegal for them to change your return. Imagine if they did and made an error. You would be all over them. Or they could just change anybodies return without telling them.

I have made errors. I refiled and paid my penalty. My mistake, not theirs.
 

Darts

Well-known member
Jan 15, 2017
23,023
11,220
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I have made errors.
It is so easy to make a mistake or two. While I was trying to fix the first mistake I noticed that the capital loss was on an American stock and I forgot to convert the USD's to CAD's originally so the loss in CAD's is actually 25% higher.

That stock was a curse. First I lost money and then made two mistakes reporting it on my T1.
 

angrymime666

Well-known member
May 8, 2008
1,094
656
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this is why I love my accountant. totally worth the cost and tax deductible.

I sit down with them yearly about tax planning. any contact or queries from cra go straight to the accountant and they speak on my behalf. much easier to have them act on my behalf and me not opening my mouth and saying something costly or cause an escalation and audit.

my accountant and my real estate lawyer are my besties.
 

Darts

Well-known member
Jan 15, 2017
23,023
11,220
113
this is why I love my accountant. totally worth the cost and tax deductible.

I sit down with them yearly about tax planning. any contact or queries from cra go straight to the accountant and they speak on my behalf. much easier to have them act on my behalf and me not opening my mouth and saying something costly or cause an escalation and audit.

my accountant and my real estate lawyer are my besties.
I use a tax software but it didn't catch the two mistakes because one still has to feed the software proper info to start with. (There are too many darn lines on the T1!) Failing to convert USD's to CAD's was totally my mistake, can't blame the T1 for that.

Tax accountants are not cheap.
 

Not getting younger

Well-known member
Jun 29, 2022
4,555
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One thing I learned some years ago. I assume it still holds true.

There are some things, that kind of like suspicious transactions in banking/investments will trigger red flags…

it’s not always as random as we might think. Me, even when I legit could have claimed or deducted more. I’d leave them. Not worth the audit, or aggravation.

Don’t know your business, don’t want to. I’d suggest an accountant. Just to clean it up quick and easy. Another reason to use professionals if your returns aren’t sort of basic straight forward things.

if it does get flagged, and someone goes through it, they answer to cra. Not you. And it’s tax deductible.
 
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K Douglas

Half Man Half Amazing
Jan 5, 2005
27,401
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Room 112
Desk audits are common.
File a Notice of Objection to the reassessment if you think they erred. Capital losses can only be deducted against capital gains.
 

Darts

Well-known member
Jan 15, 2017
23,023
11,220
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File a Notice of Objection to the reassessment if you think they erred.
I filed a T1 adjustment request and an express re-assessment was issued in minutes.
Capital losses can only be deducted against capital gains.
Yes, fortunately not all my stocks are losers so I do have enough capital gains to absorb the loss.
 

Bobzilla

Buy-sexual
Oct 26, 2002
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As a CRA employee (not in audit), we can't simply change your factually filed return. The advice to file an adjustment is correct as far as being the quickest way to resolve this is concerned.
 

Darts

Well-known member
Jan 15, 2017
23,023
11,220
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As a CRA employee (not in audit), we can't simply change your factually filed return. The advice to file an adjustment is correct as far as being the quickest way to resolve this is concerned.
Yes, the CRA agent did say that I have to make the change request using the T1 Adjustment form. I suppose that way they have the written request directly from the taxpayer in their file.
 
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Photoboy

Active member
Feb 10, 2006
603
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Just file the T1 adjustment and be done with it. Simple process overall. I’ve done it many times.
 

Darts

Well-known member
Jan 15, 2017
23,023
11,220
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Just file the T1 adjustment and be done with it. Simple process overall. I’ve done it many times.
Done! Got the express Notice of Reassessment within minutes. To be fair I did make two mistakes on the original return.

1) I entered the capital loss in the wrong box.
2) I forgot that the capital loss was in USD's and didn't convert to CAD's.

That damn U.S. stock was such a loser. Glad it is gone (good riddance!) and it messed up my tax return.
 
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