In February of 2022, practitioners reported the receipt of CRA education letters in respect of principal residence designations relating to the British Columbia region. The letters advised that the taxpayer or their representative review the return and adjust it if necessary. The letters also stated that an agent will follow up with a phone call to answer questions.

There appears to be multiple versions of the letters, with multiple triggers.

For example, one letter noted that it was sent because the taxpayer claimed the PRE for two different properties over two years (2018 and 2019, potentially reviewing whether a flipping business activity was being conducted). Another letter was sent because the taxpayer claimed the PRE and also reported a reduction in gross rental revenue (presumably looking at whether the residence was actually a rental property).

whether the letters will lead to audits or reviews

It is uncertain whether this project will lead to follow-up audit activity at this point.

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