What to do when CRA contacts you covers how to read a CRA letter and respond within the deadline. It does not cover what actually belongs in the response. That is a different question for each line item CRA questions, and contractors who assemble a generic folder of “everything I have” tend to submit either too little to close the review or so much unrelated material that it invites a broader look.
This guide covers what a complete evidence package looks like for the reviews that come up most often for IT contractors: home office expenses, input tax credits, personal services business risk, T4A matching, payroll and source deductions, and the shareholder loan account. Each section assumes CRA has already sent a specific request. The goal is a response that answers exactly what was asked.
Home Office Expense Reviews
CRA’s information request for home office expenses is usually narrow: the calculation method, the underlying square footage or hours, and receipts for the amounts claimed.
A complete package includes:
- The calculation itself, showing the business-use percentage and how it was derived (a floor plan with rooms labelled and measured, or a room-count method if that is what was used)
- Receipts for every eligible cost included in the calculation, matching the amounts claimed. For a self-employed business-use-of-home calculation, this can include rent, utilities, insurance, property tax, mortgage interest, and maintenance. For an employee claim, the eligible list is narrower: salaried employees cannot claim mortgage interest, and home insurance and property taxes are generally commission-employee items rather than salaried-employee items.
- For an employee claiming home office expenses, the T2200 signed by the employer, since without it the claim has no basis, plus support that the employee was required to work from home and met the “more than 50% of the time” or exclusive-use/regular-meeting test
- A brief written description of the workspace and how it meets the principal-place-of-business test, or the exclusive-use and regular-meeting test where that is the basis, not just a bare percentage
The reconstruction problem shows up when the percentage was calculated once, years ago, and no record of the underlying measurement survives. If the home has since been renovated, or the contractor moved, redoing the calculation for CRA after the fact is possible, but it is weaker evidence than a contemporaneous record. The home office and vehicle expense guide covers how the calculation should be documented at the time it is made, not just when it is claimed.
Input Tax Credit Reviews
An ITC review asks the contractor to substantiate GST/HST claimed as a credit on the return. CRA’s documentary requirements for ITC support are specific, not a general “show me your expenses” request.
A complete package includes, for each expense CRA has flagged:
- The supplier’s invoice or receipt with the required ITC information for that purchase level: supplier name, invoice date, and total amount for all purchases; the GST/HST charged or included and the supplier’s GST/HST registration number for purchases of $100 or more; and the buyer name, description, and payment terms for purchases of $500 or more
- Proof of payment (bank or credit card statement entry matching the invoice)
- A note on the business purpose if the expense type is not self-evident from the invoice description
The recurring gap is an expense claimed with an ITC where the invoice does not show a registration number, or where the registration number on file turns out to be invalid. CRA can and does check registration numbers against its own records. An ITC claimed on an invoice from an unregistered supplier is not a valid ITC regardless of how clean the rest of the documentation is, so verifying the number before the review, not during it, is the better sequence. The GST/HST and QST ITC documentation guide covers what CRA expects on the invoice itself.
Personal Services Business Risk
A PSB review is different from the others in this list because it does not ask for receipts. It asks about the working relationship between the corporation and its client, and the evidence is mostly documentary and behavioural rather than transactional.
The evidence needs to speak to CRA’s actual PSB test: whether the person performing the work, or someone related to them, is a specified shareholder of the corporation, and whether that person would reasonably be considered an employee of the client if the corporation did not exist. The more-than-five-full-time-employees and associated-corporation exceptions are separate points, not a substitute for the employment-status analysis.
A complete package includes:
- The services agreement or contract between the corporation and the client, showing the corporation (not the individual) as the contracting party
- Evidence the corporation controls how the work is performed: ability to decline specific tasks, ability to set or negotiate the delivery schedule, ability to subcontract or bring in help
- Evidence of more than one client relationship where that is the case, or a documented explanation of why a single-client arrangement does not amount to employment (a fixed-term project, a genuine transition period, or an active search for additional clients)
- Any evidence the corporation bears financial risk: fixed-price components, its own tools or equipment, its own liability insurance
- Corporate registration, business bank account, and invoicing history showing the corporation, not the individual, is billing for and receiving payment for the services
There is no single document that resolves a PSB review. CRA weighs the facts as a whole, and a corporation that has never turned down work, has one client, works fixed hours set by that client, and uses the client’s equipment will struggle regardless of how the contract is worded. Assembling this evidence honestly, including the facts that do not help, is a better position than presenting only the favourable facts and having CRA find the rest independently.
T4A Matching Reviews
A T4A matching review starts when a client or agency filed a T4A reporting fees paid, and CRA’s system flags that the amount was not reported, or was reported differently, on the contractor’s return.
A complete package includes:
- Copies of all T4A slips received for the year under review, from every client or agency
- Bank statements or invoices showing the amounts actually received, in case the T4A amount does not match what was invoiced (a common source of discrepancy when a T4A was issued for a different period, or when the issuer incorrectly included GST/HST or PST in box 048 even though CRA’s T4A guide says not to include those taxes)
- A reconciliation showing how reported revenue ties to the T4A totals plus any income not subject to T4A reporting
- Where a T4A appears incorrect (wrong amount, duplicate, or issued to the wrong entity), a written explanation and, ideally, correspondence with the issuer about the correction
The most common resolution is straightforward: the contractor already reported the income correctly, and the discrepancy is a timing or presentation difference that a reconciliation schedule clears up. The review becomes harder when a T4A was simply missed at filing time, in which case a reassessment adding the unreported amount, plus interest, is the likely outcome, and the conversation shifts to minimizing penalties rather than avoiding the reassessment. CRA penalties and interest covers what that exposure looks like.
Payroll and Source Deduction Reviews
A payroll review looks at whether the corporation withheld and remitted the correct source deductions on salary paid to the owner-manager or any employees.
A complete package includes:
- Payroll registers or pay statements showing gross salary, CPP, EI (where applicable), and income tax withheld for each pay period
- Proof of remittance to CRA for each period, matching the amounts withheld
- T4 slips issued for the year, reconciled to the payroll registers
- For an owner-manager who also takes dividends, a clear separation showing which amounts were processed as payroll versus declared as dividends, since these follow different mechanics and different slips
The gap that shows up most often is salary that was decided on paper (an accrual entry, a board resolution) but never actually processed through payroll with source deductions withheld and remitted. CRA’s review is about what was actually withheld and remitted, not what was intended. An accrued but unprocessed salary amount is not the same as paid salary for source deduction purposes. The payroll and T4 guide covers how salary should be processed to avoid this gap.
Shareholder Loan Account Reviews
A shareholder loan review looks at the running balance between the corporation and the owner-manager, most often triggered by a debit balance (money owed to the corporation) that has persisted across a corporate year-end.
A complete package includes:
- The shareholder loan continuity schedule showing the opening balance, every draw and repayment during the year, and the closing balance
- Supporting detail for each entry: what the draw was for, or what repaid it, tied to the corporate bank records
- If the balance is a debit that was repaid within one year of the corporation’s year-end (a common relief), the dates showing the repayment timeline
- Board or director resolutions supporting any amounts characterized as loans on specific terms, rather than informal draws
A shareholder loan review usually turns on timing. A debit balance repaid within the required window generally avoids being included in the shareholder’s income, but a repayment that is really a new draw taken shortly after (a series of draws and token repayments rather than a genuine repayment) does not satisfy the relief. CRA looks at the pattern across more than one year when reviewing this account. The shareholder loan account guide covers the underlying rules this evidence package needs to support.
Building These Packages Before the Letter Arrives
Every package in this guide is easier to assemble from records kept contemporaneously than reconstructed after a CRA letter sets a response deadline. A contractor whose bookkeeping already separates GST/HST, tracks the shareholder loan account continuously, and retains supplier invoices with registration numbers can usually respond to a review within days. A contractor reconstructing a year of records from bank statements and memory is working against the clock CRA set in the letter.
Behind on books covers what that reconstruction looks like when the records were not kept current. The better position is not needing that guide, because the evidence package was already sitting in the file before CRA asked for it.
Get in touch if you have received a CRA review letter and want help assembling the specific evidence package it calls for.