Understanding the CRA: What They See When You File Taxes

Filing your taxes in Canada can feel like dropping your documents into a black hole—but what actually happens on the other side? What does the Canada Revenue Agency (CRA) see when you hit "submit"?

Let’s take a peek behind the curtain.

1. Your Full Financial Picture

Once you file your return, the CRA sees much more than just your numbers. They see:

• Your reported income (T4s, T5s, freelance income, etc.)

• Deductions and credits you're claiming

• Contributions (RRSPs, tuition, donations)

• Past filing history and patterns

Even if you don’t include all your income, CRA likely already has a copy—thanks to employers, banks, and institutions who’ve submitted slips on your behalf.

They don’t need to guess. They already have the puzzle pieces. You're just arranging them.

2. Red Flags & Risk Scores

The CRA uses automated systems to assess risk. Your file is given a risk score, which helps flag:

• Unusual jumps or drops in income

• Over-claimed expenses (especially for self-employed individuals)

• Repeated high deductions or credits

• Missing or mismatched slips

This doesn’t guarantee an audit—but it could lead to a review, where they’ll ask for receipts or supporting documents.

Consistency is your best friend. Sudden, unsupported claims = extra attention.

3. Matching & Cross-Checking

CRA cross-checks the info you submit with third parties—employers, banks, schools, and even your spouse’s return. If you claimed a tuition transfer, for example, they’ll verify your dependent’s return to ensure it all lines up.

They also use data analytics and AI to detect anomalies and patterns across industries and regions. It's not personal—they're just good at spotting when something doesn’t fit the mold.

4. Your Payment or Refund Status

Once your return is assessed, CRA determines what you owe—or what they owe you.

Your Notice of Assessment (NOA) shows:

• What was accepted or adjusted

• Your total balance (or refund)

• Any interest or penalties

• Your RRSP/TFSA room for next year

And yes, they keep track of when and how you paid. Late payments can lead to automatic interest, so don’t ghost the CRA!

5. Long-Term Record-Keeping

Even after this tax season is done, the CRA holds on to your records for years. This allows them to conduct audits later, assess eligibility for programs, or revisit past filings.

 Always keep your own tax records for at least six years in case you’re asked to support previous claims.

Transparency Wins

The CRA isn’t out to get you—they’re out to make sure the tax system works fairly for everyone. When you understand what they see, you can file smarter, stay compliant, and avoid nasty surprises.

Be honest, keep records, and if you're unsure? Get professional help. A well-filed return speaks for itself.