THE BLOG

Tax Returns: Giving the Tax Man the Slip

02/24/2014 05:14 EST | Updated 04/26/2014 05:59 EDT

After you file, the CRA's slip-matching process checks all returns.

So you filed your income tax return with the Canada Revenue Agency (CRA) well in advance of the April 30 deadline. Everything went without a hitch and you have a refund cheque in your hands, or directly deposited in your bank account. Free and clear until next year, right?

Not quite. In fact, the tax return process has just begun at this point. It's not over until the CRA has finished its slip-matching program during the next few months.

Slip-matching is just what it sounds like: beginning in the fall, the CRA painstakingly matches every slip registered in its system to line items on tax returns based on your Social Insurance Number, looking for inconsistencies. If everything matches, it's all good. But if there are differences in some items or a slip missing, the CRA will reassess the return. If that reassessment results in a larger tax bill or a smaller refund, the taxpayer is on the hook for the difference, plus interest calculated from May 1.

With that in mind, it's important to make sure you record all the slips on your tax return appropriately.

For employees, the T4 slip is the most important slip. It's a statement of employment income, tax withheld at source, taxable benefits, commission payments and more. Employers are responsible for generating your T4 and sending it to you. Each has its own policy regarding the timing: some may include it with a February paycheque, others may allow you to download and print your own T4. But the only deadline employers face is the February 28 mailing date, so if your company waits until the last minute, you might not have your T4 until early or mid-March.

If you worked for more than one company in the calendar year, you'll need a T4 from each of them, so make sure former employers have your current mailing address.

On the other hand, if you are on contract, you might not get a T4 at all; you're responsible for keeping track of your income and reporting it correctly.

Various flavours of T4 slips are issued by the government as a record of federal benefits paid. Slips for Employment Insurance benefits (T4E), Old Age Security (T4A-OAS) and Canada Pension Plan benefits (T4(A)- P) are issued by the government, but if you want to get a head start on gathering your paperwork, you can download these slips from Service Canada. You'll have to create a profile using a personal access code. If you received Employment Insurance (EI) benefits, the code will have been included with your first benefit statement. If not, you'll have to request one from Service Canada.

Your financial institution is responsible for issuing receipts for your registered retirement savings plan (RRSP) contributions. Although there's no specific deadline for this, they're usually quite sharp about it -- after all, you're a customer. The receipts should indicate if the contributions were made in 2013, or in the first 60 days -- that is, before the RRSP deadline -- of 2014. You can choose not to claim contributions made between January 1 and March 3 on your 2013 tax return, but they still have to be recorded for information purposes. Usually the deadline is March 1 but, since it falls on a Saturday in 2014, the deadline is March 3.

Your capital gains, dividends, mutual funds and other investment income will be recorded on T3 and T5 slips. When you receive this information depends on your investment portfolio. The slips for creating T3s and T5s are available on the CRA web site as blank or fillable PDF files, but this year the CRA's Web Forms application will allow users to file batches of up to 100 slips online.

If you received the Universal Child Care Benefit (UCCB) this year, you'll receive an RC62 slip. If you're married, the spouse with the lower income reports this amount on his or her tax return. A single parent has the option of including this amount as income for the child for whom the benefit is being paid.

Post-secondary students who want to claim a tax credit for tuition will need a T2202A slip. If the credit is more than is necessary for the student to reduce his or her tax owing, the remainder of the education credit can be transferred to a parent or grandparent (including in-laws) or spouse (including common law) to a maximum of $5,000. The student must complete and sign the transfer section and supply a copy to the recipient.

A lot of paperwork goes into preparing a tax return, and missing even one slip can leave you on the hook, with interest. If you are expecting a refund, it can be tempting to send in your return as soon as possible. But you need to wait for all your slips or you could get an unwelcome letter from the CRA before the end of the year.

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