The hidden meaning behind a CRA Notice of Assessment?
Understanding a CRA Notice of Assessment
You will receive a Notice of Assessment when the Canada Revenue Agency (CRA) receives and processes your tax return (or if the CRA files your return for you-called a notional assessment or arbitrary assessment).
The information listed on the Notice of Assessment includes:
- Personal contact information
- Statement date and tax year
- The type of return that has been assessed
- Any action that you may need to take (such as paying a balance)
- Your current balance (i.e. the money you owe to the CRA or the money that is owed to you in the form of a refund)
- The amounts that have been used to calculate your tax listed with the T1 line number.
The notice will also include sections regarding:
- An explanation of changes or corrections made to your tax return
- Your RRSP/PRPP deduction limit
You may receive your CRA Notice of Assessment by mail, or through the CRA My Account website, depending on how you requested to receive it. If you feel as though you should have received a Notice of Assessment but have not, you can contact the CRA to discuss the issue.
What you Need to Know About a CRA Notice of Assessment
Just because you receive a CRA Notice of Assessment, this doesn’t mean that the CRA is done looking at your tax return forever. Your assessment will be sent to you after the CRA initially screens and reviews your documents. This is a basic review. You may be asked to provide additional information or documentation during this review process. Once the screening is done, you will receive your Notice of Assessment.
However, the CRA can go back four years and review returns. In fact, if there is a suspicion of fraud, the CRA can extend the four-year deadline and look back even further.
For this reason, it’s important that you keep your CRA Notice of Assessment as well as any other applicable tax documents. These will be needed if the CRA decides to reassess your return or audit your taxes.
You should keep your Notice of Assessment in a safe place. You may need it if you apply for a mortgage or a loan, or if you apply for a social program that requires confirming your annual income. The CRA states that you should keep all income tax records and documents for six years after the end of the tax year for which they apply.
If You Disagree with your CRA Notice of Assessment
If you disagree with the Notice of Assessment CRA provides, you can contact the agency to discuss your issue. The next step would be to file a formal objection. A Notice of Objection must be filed within 90 days of the date of your Notice of Assessment. When you file an objection, you must explain why you disagree with the assessment and you must provide proof in the form of documents that state your case.
If the CRA agrees with your objection, it will adjust your return and send you a revised noticed. If it does not agree with your objection, it will send you written notice that confirms the original Notice of Assessment CRA sent out.
If you still disagree with the CRA at this point, you can file an appeal to the Tax Court of Canada. If you decide to take this step, it is strongly encouraged that you speak with professionals before doing so. This process is often very complicated, lengthy, and daunting. Please contact us if you would like to discuss a filing a Notice of Objection or an appeal.
What is a “Notice of Reassessment?”
As mentioned, the CRA has the right to go back and reassess prior year income taxes. If this happens, you will receive a Notice of Reassessment. This will replace the Notice of Assessment that you originally received. This document will state the reasons for the reassessment. Much like with a Notice of Assessment, you have 90 days from the date of the reassessment to file an objection.
If you intend to file an Notice of Objection, it’s recommended that you speak with a professional first. The process can be quite complicated and the CRA tends to be quite difficult to understand and to deal with. Please contact us if you are considering filing a Notice of Objection. We can help guide you through the process.
What if I don’t object within the 90-day period?
You can apply for an extension; however, it is recommended to use a professional as it is complicated. As mentioned, the CRA has the right to go back and reassess prior year income taxes and can deny extensions on merits. If this happens, you will receive a Notice of Confirmation and you will have to petition the Tax Court for a remedy.
If you intend to file an application for extension or petition the Tax Court, it’s recommended that you speak with a professional first. The process can be quite complicated and the CRA tends to be quite difficult to understand and to deal with during disputes. We have the experience and specific knowledge to ensure success. Fee’s are always justified by the result! Please contact us if you are considering filing an application for extension to file a Notice of Objection. We can help guide you through the process.