Every year, thousands of taxpayers receive letters requesting additional information from the Canada Revenue Agency. The request is not an audit but simply intended to verify a credit or deduction was claimed correctly. As long as you can supply the correct documentation within the CRA’s deadline, there should be no issues with a review.
If your Canada Child Tax Benefit (CCTB) is reviewed, the CRA letter could include requests for copies of birth certificates as well as letters from neighbours to prove the children are living at the address or notes from the school. Collecting the documents can be time-consuming but you need to respond to prove that you are eligible to receive the benefit.
We have seen cases where parents have ignored the request to prove custody and they have been reassessed even though they were fully entitled to the benefit. If you do not respond to the CRA within their deadline, they will assume you do not qualify and will re-calculate your returns accordingly.
For the CCTB, this can result in owing thousands of dollars. You can file an adjustment with the correct documentation to have the tax bill reversed but it will take time and more effort.
Reviews of CCTB are random and the CRA is entitled to perform the check. Collecting the requested documents may seem unnecessary because your children obviously live with you, but you need to be able to prove it to the CRA. Failure to respond to the request can create greater headaches.