Receipts Are Your Best Friend: Surviving a CRA Tax Review

Have You Ever Received a CRA Review Letter? Don't Be Scared.

If you've ever opened your mailbox to find a letter from the Canada Revenue Agency asking you to verify something on your tax return, you're not alone, and more importantly, you don't need to panic.

A CRA review letter is not a conviction, a penalty, or even an accusation. In many cases, it's completely routine. The CRA regularly selects returns for review as part of their normal process, and the majority of people who respond with proper documentation hear nothing further.

The golden rule is simple: as long as you have your receipts, you are covered.

That's it. The CRA isn't out to get you, they just want to see the paper trail behind what you claimed. If you claimed it and you can prove it, you have nothing to worry about.

Be Prepared Before the Letter Arrives

Here's something most people don't realize: CRA reviews tend to happen in the fall, typically after the dust settles from tax season. That means you have time right now to get organized. Don't wait until the letter arrives; gather your supporting documents while everything is still fresh and accessible.

What the CRA Most Commonly Asks About

1. Medical Expenses

Medical claims are one of the most frequently reviewed items on a personal return. The CRA wants to see that what you claimed was a real, eligible medical expense, and that you paid for it.

What to keep: Original receipts from your doctor, dentist, pharmacist, or other health provider. The receipt should show the patient's name, the date, the amount paid, and the nature of the service or product.

Make it a habit: every time you pay for a medical expense, set the receipt aside in a dedicated folder, physical or digital. By the end of the year, everything is already organized.

Many health care institutions also provide a year-end expense/visit summary. Be sure to ask for those at tax time.

2. Charitable Donations

Donation claims are another area the CRA looks at closely, and this is one where having the right paperwork really matters. Not just any receipt will do, it has to be an official CRA donation receipt from a registered charity.

What to keep: Your official donation receipt must include the charity's registered name, its CRA registration number, the date of the donation, and the amount. If you donated through a workplace giving program or a fundraising platform, make sure you receive and save the official receipt, not just a confirmation email.

If you're unsure whether a charity is registered with the CRA, you can verify it on the CRA's website before you donate: https://apps.cra-arc.gc.ca/ebci/hacc/srch/pub/dsplyBscSrch?request_locale=en

3. Home Office Claims

If you work from home and claim a portion of your home expenses as a deduction, be ready to show that the space is used regularly and exclusively for work.

What to keep: Utility bills, internet bills, rent or mortgage statements, and a simple written calculation showing how you arrived at your claimed percentage (e.g., the square footage of your workspace divided by total home square footage).

If you were an employee, your employer must fill out a T2200, Declaration of Conditions of Employment. Employers complete this form to certify that you were required to work from home and pay for your own expenses. You must keep this form in your records.

4. Rental Income

If you rent out a property, or even a room, through a platform like Airbnb, that income needs to be declared. The CRA now receives data directly from many of these platforms.

What to keep: Lease agreements or platform statements showing income received, along with receipts for any expenses you deducted, repairs, property taxes, insurance, and so on.

5. Self-Employment Expenses

Self-employed individuals can deduct legitimate business expenses, but the CRA watches for claims that seem out of proportion to the income earned, especially vehicle expenses.

What to keep: A mileage logbook, business receipts, and invoices that show a clear business purpose for each expense claimed.

6. Other Common Review Areas

Beyond the above, the CRA may also ask about RRSP contributions and withdrawals, tuition and education credits, foreign income or assets held outside Canada, and, in some cases, your overall lifestyle relative to your declared income.

For all of these, the answer is the same: keep your documents, keep them organized, and keep them for at least six years.

The Bottom Line

Getting a CRA review letter can feel stressful in the moment, but it doesn't have to be. Most reviews are straightforward. Most people get through them without any issue. The ones who struggle are the ones who claimed something they couldn't back up.

So start now. Create a simple folder for your medical receipts. Save your donation receipts the moment you receive them. Keep a logbook if you use your vehicle for work. Small habits today mean no surprises in the fall.

You claimed it honestly. Now just be ready to show it.

This blog is for informational purposes only and does not constitute legal or tax advice.