At this point, RQ form CIT-520 is not all that new, but has been in use for quite awhile.
It is definitely not a replacement for RQ. It is described by some as a RQ-lite. It appears to often be issued in lieu of RQ in circumstances which would have resulted in RQ in the somewhat recent past. But it is not RQ, and it sometimes appears to be issued for reasons other than residency questions.
Thus, it may be issued rather than RQ where, for example, particular information or documents could readily resolve a question CIC has relative to the applicant's residency qualification. But it may also be issued for other purposes, such as to confirm identity, particular address or work history, or such.
Hard to guess how many applicants are being issued RQ these days, although it appears to be way fewer than the number who were in 2012. While the decline may be due in part to a number of applicants being issued CIT-520 rather than RQ, my sense is that CIC has extensively refined its criteria for the issuance of RQ, so that RQ is more focused on cases which more likely have real residency issues. In this regard, here again some potential questions may be readily resolved by a specific request, such as for CRA Notices of Assessment, or home rental documentation for a particular period, among other examples. If the applicant timely provides the requested documentation, the applicant is not deemed a residency case, which can have a big impact on the subsequent processing timeline. If CIC is not satisfied by what is submitted, RQ may then be issued.
That said, the CIT-520 form has also been sent to quite a few applicants who had already been issued RQ and responded to RQ. So it can also be a follow-up for already RQ'd applicants. Some refer to it, in this situation, as a second-RQ but it is just what it is, an additional request for specific documents.
There are numerous reports that many applicants who have timely and appropriately responded to the CIT-520 request have incurred only minor delays in processing. This is not a universal result, but appears to be the result for many cases in which the requested documentation does indeed resolve the question triggering its issuance. Of course, when the CIT-520 form is a follow-up for an already RQ'd applicant, such an applicant is already well into the long-delayed mode. And, for some applicants the response may in turn raise other questions or concerns. So there is no guarantee, but again it appears that for many applicants these requests are not problematic, not a big deal.
And, again, alone, it appears quite certain that for an applicant sent the CIT-520 form, that alone does not mean that applicant has a residency case (in contrast, applicant's RQ'd do have, unless and until CIC decides otherwise, a residency case).