I got a letter from the CRA saying they're reviewing my return. What should I do?

Don't panic — and don't ignore it. A review is not the same as an audit. Here's what to do, in order:

1. Read the whole letter. It tells you which tax year, which lines CRA is checking, and your deadline to reply.
2. Gather exactly what they ask for — usually receipts, slips, or proof for one specific deduction or credit.
3. Send it by the deadline. Use CRA My Account ("Submit documents") or mail it. Keep copies of everything you send.
4. If you can't make the deadline, call the number on the letter and ask for more time *before* it passes — not after.
5. Don't send extra documents they didn't ask for. Answer the question asked, nothing more.

	CRA Review	CRA Audit
What it is	CRA double-checks specific lines on your return	In-depth examination of your books and records
How common	Very common — thousands of reviews every year	Less common, more serious
What you do	Send the requested documents by the deadline	Get organized; consider professional help
If everything checks out	No change to your return	No change to your return

I didn't file a T1135 for my foreign bank accounts. Can they really fine me $2,500?

Yes. If the total *cost* of your specified foreign property was more than $100,000 CAD at any time in the year, you must file Form T1135 — even if you owed zero tax on it. Foreign bank accounts, stocks held abroad, and foreign real estate (not your vacation home) all count.

1. Check the threshold. Add up the cost (not market value) of your foreign property. Over $100,000 CAD at any point in the year? You must file.
2. Know the penalty. $25 per day late — minimum $100, maximum $2,500 per year — and it applies even when no tax was owing. Gross negligence can reach $500/month, up to $12,000.
3. File the missing forms now. Late beats never — the daily penalty stops growing once you file.
4. If several years are missing, read about the Voluntary Disclosures Program below — but only *before* CRA contacts you.
5. Newcomers: you don't file T1135 for the year you first became a Canadian resident. From the next year on, you do.

Situation	Penalty (per year)
Filed late	$25/day — min $100, max $2,500
Gross negligence / knowingly not filing	$500/month, up to $12,000
No tax owing on the property	Penalty still applies

I made a mistake on a past tax return. Is there a way to fix it without huge penalties?

Yes — the CRA's Voluntary Disclosures Program (VDP). The golden rule: come forward before CRA contacts you about it.

1. Act before CRA finds it. Once a review or audit starts on that issue, the best relief is off the table.
2. Make the disclosure complete — all years, all errors. Partial disclosures get rejected.
3. File Form RC199 (or a letter with the same information) plus your corrected returns through CRA My Account's "Submit documents."
4. Pay the tax you owe (or set up a payment plan). VDP relief covers penalties and interest — not the tax itself.
5. Know the two outcomes under the current program: come forward on your own ("unprompted") → penalties waived and 75% of interest relieved; after CRA has contacted you ("prompted") → reduced relief.

	Unprompted (you came forward first)	Prompted (after CRA contact)
Penalties	100% waived	Up to 100% waived (CRA discretion)
Interest	75% relieved	25% relieved
Criminal prosecution	No referral	No referral

TFB can prepare your corrected T1 returns (from $89) and get the paperwork filed properly.

I just moved to Canada. What do I need to know about my first tax return?

1. Your first return covers arrival day to December 31 — not the full year.
2. File even if you earned nothing. Filing unlocks the GST/HST credit, the Canada Child Benefit, and provincial credits.
3. Your RRSP deduction limit is $0 in your first year. The limit builds from Canadian income you report, so it starts the year after you arrive.
4. No T1135 in your immigration year — but write down the fair market value of your foreign property on arrival day. That's your cost base for future years.
5. Report world income from your arrival date onward. Income earned before you arrived isn't taxed in Canada.
6. Keep your arrival documents — residency start date, SIN, address.

Do	Don't
File a return for your arrival year	Assume no income means no return needed
Apply for CCB / GST/HST credit right away	Wait until "next year" to deal with CRA
Record foreign property values on arrival day	Guess at T1135 thresholds later
Keep every slip (T4, T5) and receipt	Throw paperwork away

TFB prepares newcomer T1 returns from $89 (students $59).

I'm self-employed. Which expenses get the most CRA attention?

Two categories trigger the most questions:

Meals and entertainment

1. Only 50% is deductible — the lesser of what you spent and what's reasonable in the circumstances.
2. Keep the receipt and a note of who you met and why.
3. Client dinners and coffee meetings: 50%. Personal meals: 0%.

Vehicle expenses

1. You can only deduct the business-use percentage: business km ÷ total km.
2. Keep a logbook — date, destination, purpose, and km for every business trip. CRA regularly disallows vehicle claims with no logbook.
3. Deductible costs (prorated): fuel, insurance, maintenance, and lease or loan interest within CRA limits.

$100 client dinner	Amount
Dinner cost	$100
Deductible (50%)	$50
Tax saved (at ~30% rate)	~$15
Still out of pocket	~$85

Never spend $100 "for the write-off" — spend it because the business needs it. Books a mess? TFB bookkeeping starts at $259/month, first month free.

I don't live in Canada but I rent out my property here. How does the tax work?

The default rule: your tenant or property manager must withhold 25% of the gross rent and send it to CRA by the 15th of the following month. But there's usually a better option:

1. Know the default. 25% on *gross* rent, no expenses deducted. On $2,000/month rent, that's $500/month withheld.
2. Elect under Section 216. File Form T1159 and be taxed on your net rental income — rent minus mortgage interest, property tax, insurance, repairs, and management fees — at graduated rates. Usually far less than 25% of gross.
3. File Form NR6 early (by January 1, or before the first rent is due). With CRA approval, only 25% of your net rent is withheld during the year — much better cash flow.
4. Watch the deadline. File the Section 216 return within 2 years of year-end (by June 30 of the next year if you filed NR6).

$24,000/year rent, $14,000 expenses	Default: 25% on gross	Section 216: tax on net
Tax base	$24,000 gross	$10,000 net
Tax paid/withheld	$6,000	~$2,000–$2,500 at graduated rates
Expenses considered	No	Yes

(If a corporation holds the property, T2 returns start at $899 at TFB.)

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Questions about your situation? WhatsApp 437-879-6899 — T1 returns from $89, students $59.

Official CRA links

– Voluntary Disclosures Program (VDP): https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/16-5-1/voluntary-disclosures-program.html

– Newcomers to Canada and the CRA: https://www.canada.ca/en/revenue-agency/services/tax/international-non-residents/individuals-leaving-entering-canada-non-residents/newcomers-canada-immigrants.html