CRA’s 'stupid mistake' compels taxpayer to pay taxes on an extra $53,258

I rarely get any physical mail anymore. In fact, if it weren’t for my weekly New Yorker magazine subscription, my mail carrier would have no reason to visit my front stoop. Over a decade ago, I switched all my bills (hydro, natural gas, home internet, credit cards, etc.) to email delivery, and this includes most tax slips, as well as correspondence from the Canada Revenue Agency.

So, you can imagine my horror when I arrived home from work one dark, cold January evening this winter to find a solitary piece of mail: an oversized, brown envelope from the CRA. This was most unusual, since I’ve been receiving all my notices of assessment (and, occasionally, reassessment) via email notification, which requires me to log into the CRA’s My Account portal to view the notice. If the CRA was sending me oversized physical mail, it was unlikely to be a novelty cheque. I suspected something was awry.

Sure enough, my 2023 tax return was caught by the CRA’s matching program, which determined that I had “received investment income that appears to have been not fully reported.” Uh oh.

The reason for the large brown envelope was because the CRA, along with its letter to me, had enclosed two legal-sized spreadsheet printouts containing summaries of all my 2023 T5 and T3 Slips reporting investment income. Apparently, I had omitted to include some Canadian dividend income from a T5 slip from a secondary brokerage account I had.

Under the Income Tax Act, if you fail to report at least $500 of income in a tax year and in any of the three preceding taxation years, you can be hit with a “repeated failure to report income” federal penalty. This is calculated as the lesser of 10 per cent of the unreported income and 50 per cent of the difference