CRA adding unsupported income to T1 returns

Tax Topics
1

I’m curious how many other T1 preparers have seen this specific issue. I now have 5 clients (out of 250 total T1 clients) that have experienced this:

  1. CRA is missing a T4 slip for the client
  2. Relates to 2018 or 2019 tax year
  3. Some of the employers (perhaps all, but not confirmed) have filed the T4s via paper mail
  4. Sometime during 2020, the T1 was reassessed.
  5. In some cases, CRA sent a letter asking for support. But, for at least two of my clients there was no communication prior to reassessment.
  6. In the reassessment, CRA removed the deductions for CPP, EI, and income tax (withheld by employer). Then, CRA moved the income amount from line 10100 to line 13000 (101 to 130).
  7. Upon filing a T1-ADJ, and including the paper copy of the T4 slip, CRA re-assessed the T1, added the T4 info back onto the T1, but left the fictitious amount on line 13000.

How often is this happening?
Why is this happening?

2

I had a client which we filed his return. They asked him for a copy of the T4. When client failed to send it, they re-assessed the return. They allowed him to include the income and gave him the CPP and EI deductions but denied the income tax deduction leaving him with a $6K bill. I sent in the T4 using submit documents and it was sent to the matching department on June 24. Still no update on his file.

3

I have 2 clients from 2018 and 2019. It took over 10 months for CRA to reverse the charges It turns out the employer was doing the payroll with deductions but didn’t summit the money to CRA, It was a lot of work dealing with CRA to clear the charges.