Federal agency responds to fraud concerns with new tool targeting fake income documentation
The Canada Revenue Agency (CRA) is moving closer to implementing a secure digital tool that would allow mortgage lenders to verify borrower income directly, which the agency said is part of a broader effort to combat mortgage fraud.
In late 2024, the CRA sought feedback from mortgage lenders, brokers, insurers, and credit unions to gather input on a digital income verification tool. Stakeholders flagged income misrepresentation, particularly forged or altered tax documents, as a growing concern in the mortgage process.
The consultations revealed support for a secure, borrower-authorized digital tool that enables real-time access to verified income data directly from CRA databases.
“Participants were clear that a tool built by the CRA that allows mortgage professionals to verify the validity of borrowers’ income would streamline the mortgage approval process and reduce the risks of fraud significantly,” the agency noted in its summary report.
Currently, verifying income requires multiple steps – reviewing notices of assessment, income slips (such as T4s), and contacting employers. While effective, the process is time-consuming and susceptible to fraud. Industry participants said a centralized verification tool could reduce that risk and simplify the workflow for approvals.
Roundtable participants, which included the Canadian Bankers Association, the Canadian Mortgage Brokers Association – British Columbia (CMBA–BC), Mortgage Professionals Canada, Canadian Mortgage Brokers Association – Atlantic (CMBA–Atlantic) and the Canadian Credit Union Association, stressed the importance of digital integration. They recommended either a dedicated CRA portal or an API that plugs into existing mortgage application platforms, offering real-time responses upon borrower authorization.
Respondents also emphasized the importance of robust data, including total, net, and taxable income over at least two years. Many called for document-level access to CRA records such as proof-of-income statements and account balances—particularly important for assessing self-employed and gig workers.
While 41% of survey respondents indicated that a simple CRA “confirmation of validity” would suffice, others rejected a yes/no response format. They argued that such a format lacks the detail needed to make informed lending decisions and to identify potential fraud.
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To safeguard taxpayer information, participants recommended security features such as two-factor authentication, borrower alerts when data is accessed, time-limited access, and audit trails. They also stressed that borrower consent must be at the core of the process.
The tool would also need to accommodate users who lack CRA digital access, such as seniors or rural residents, raising calls for both integrated and standalone solutions.
Participants identified four CRA documents as most useful for income verification: notices of assessment, proof-of-income statements, tax slips, and CRA account statements. While most respondents want direct access to these, others would accept CRA validation, provided it includes shareable data on income sources.
The CRA has begun internal work to assess how the tool could be developed, consulting with international peers and IT, privacy, and legal experts. It aims to begin rolling out the system as early as 2025.
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