The short version
- CRA matches every slip it receives (T4, T4A, T5, T3, T5008, T4E and others) against your return. If a slip isn't on your return, it adds the income and sends you a notice, sometimes with a proposal letter first.
- Most of these are simple: a forgotten T5 for bank interest, a second T4, a T4A from a short contract. You owe the tax plus daily interest from April 30 of that year.
- Miss $500 or more twice in four years and there's a penalty: the lesser of 10% of the income and 50% of the extra tax (less tax withheld on it).
- Check before you pay: slips can be duplicated, issued to the wrong SIN, or already included elsewhere on your return.
- Once CRA has written to you about it, that item can't go through the Voluntary Disclosures Program. Other unreported income can, if CRA hasn't found it yet.
CRA Says I Have Unreported Income
CRA's matching program is the most patient auditor in the country. It never forgets a slip, it never gets bored, and it's right most of the time. If your bank, employer or broker sent CRA a slip that didn't make it onto your return, a letter is coming, usually 12 to 18 months later. The question is whether the letter is right, and what it costs.
What the Letter Usually Means
| Slip | Common reason it was missed | Read more |
|---|---|---|
| T4 from a second or short job | Forgot it, or it came late | The T4 slip |
| T4A (contract, scholarship, pension) | Thought it wasn't taxable, or wasn't mailed | The T4A slip |
| T5 bank or GIC interest | Small amount, bank sent it online only | The T5 slip |
| T3 fund distributions | Issued in late March, after you filed | The T3 slip |
| T5008 securities sales | Shows proceeds only; CRA may treat the whole amount as gain | Stock taxes |
| T4E (EI) or T4RSP (RRSP withdrawal) | Forgotten, or tax already withheld so assumed done | RRSP withdrawals |
Missing slips can be downloaded from My Account before you file next time; see missing tax slips.
Got the matching letter or reassessment?
Upload it. The analyzer lists each slip CRA added, the tax and interest, any penalty, and whether the numbers look right.
What It Costs
Example: you forgot a T5 with $2,000 of interest, and your other income was a $60,000 salary in Ontario. The extra tax is about $590, plus interest at 7% a year from April 30 of that year. If you had also missed $500 or more in any of the three previous years, add a penalty of the lesser of $200 (10%) and about $295 (half the extra tax), so $200. Run your own numbers in the income tax calculator; interest and penalties are explained on penalties and interest.
When the Letter Is Wrong
- T5008 with no cost: CRA may tax the full proceeds. Send your adjusted cost base and the gain is recalculated.
- Duplicate or wrong slip: ask the issuer for a cancelled or amended slip, then send it to CRA.
- Already reported: the income may be on another line (for example, business income that included a T4A). Show where.
- Not yours: a slip under your SIN that you don't recognize can be identity theft; see suspicious activity.
Answer a proposal letter by its deadline with documents. Already reassessed? You can still send proof, or file a notice of objection within the objection deadline.
CRA added income that isn't right?
The CRA objection SmartFile reads the reassessment, works out your deadline, and builds the objection with the slips and cost records that prove your numbers.
Other Income CRA Doesn't Know About Yet
Cash work, crypto gains, foreign income and side businesses don't come with slips. If you have unreported income CRA hasn't contacted you about, coming forward through the Voluntary Disclosures Program can reduce penalties and interest. It has to be voluntary: once CRA has written to you about an item, that item no longer qualifies. Cash income is covered on cash income.
Unreported Income Questions
How does CRA know I have unreported income?
Employers, banks, brokers and payers file information slips such as T4, T4A, T5, T3 and T5008 with CRA. Its matching program compares them with your return and flags any slip that is missing.
What is the penalty for not reporting income in Canada?
If you fail to report $500 or more in a year and also failed to report $500 or more in any of the three previous years, the penalty is the lesser of 10% of the unreported amount and 50% of the extra tax minus tax withheld on it. Interest also applies.
Can I use the Voluntary Disclosures Program after a CRA letter?
Not for the income CRA has already contacted you about. Other unreported income that CRA has not yet raised may still qualify.
What if the T5008 slip shows only the sale price?
CRA may tax the whole amount. Send your adjusted cost base records so the capital gain can be recalculated.
How long do I have to respond to a CRA matching letter?
Follow the deadline in the letter. If CRA has already reassessed you, you can object within 90 days of the notice or one year after the filing deadline for that year, whichever is later.
Sources: CRA, penalty for repeated failure to report income (Guide RC4060); Prescribed interest rates. Checked October 2026. The 12-to-18-month timing is typical, not a CRA rule. Whether CRA sends a proposal letter first or reassesses directly varies by case. The example uses our 2026 Ontario rules engine, rounded.
Last reviewed October 5, 2026 against CRA and Government of Canada sources. How we check our facts.