After you prepare and file your tax return, the Canada Revenue Agency (CRA) will issue you a Notice of Assessment (NOA). Here are some tips on what to look out for when you receive an NOA, common discrepancies between the NOA and your tax return, and how to resolve them.
The NOA is an annual statement that tells you how much you owe in income tax (or how much tax you’ll get back). It also lists important details such as your RRSP deduction limit and amounts carried forward for next year’s return, such as unused tuition, education credits, and capital losses.
If you filed your tax return through Netfile, the CRA’s electronic filing service, it would take approximately two weeks for your NOA to appear on “CRA My Account,” a secure online portal where you can view your income tax. employees and their benefits. information.
If you believe you should have received your NOA but did not, contact the CRA at 1-800-959-5525 (for businesses).
Always compare your NOA with the calculations on your T1 or T2 tax return filed to see if there have been any changes. There are several common reasons for discrepancies:
You’ve already paid your tax bill, but your NOA says you have a balance due or owe interest.
Step one: don’t panic.
The NOA is computer-generated, which means that payments made with your tax return may not immediately show up on the NOA.
For example: Let’s say you owe the CRA $10,000 this year.
You paid the amount on April 30th, but because the CRA has not yet processed your payment, the $10,000 is still in your Unassigned Payments account and has not been credited to the amount you owe. The computer that checks your tax return won’t know you owe money until you fill out the NOA, so it will mark the amount as missing.
If your payment hasn’t gone through and they’ve processed the refund, they’ll send you an invoice for the full amount owed plus interest. Therefore, you could be paying several hundred dollars in interest that you don’t owe.
If you’re self-employed or a sole proprietor, you and your spouse have until June 15 each year to file your return, but the CRA will still charge interest on payments you don’t receive by April 30.
If you file late, you will also be charged late filing penalties.
There is a statement at the top of the NOA that says you must pay what you owe minus any amounts you have paid that have not yet been processed, but it is very common for people to not do this and pay anyway.
Sometimes you miss a tax document that contains both declared income and withheld income tax (e.g. a T4A pension certificate).
If the CRA adds the receipt later, it will be able to add the income without crediting the withheld income tax. Always check that all quantities have been added.
Let’s say you have investment income on a T5 slip: If you enter $550 instead of $5,500, which is a common mistake, the computer system adds the full $5,500 instead of just the $4,950 you left out and retaxes you on the $550 you have already reported.
You can always ask the CRA to send you a copy of the confirmation if you haven’t received one from your bank, financial institution, or employer. Don’t be afraid to ask questions so you can compare numbers.
To contest a CRA income tax assessment, you must file a Notice of Objection. Usually, the basis for an objection is a disagreement with the CRA’s assessment of taxes owed or a dispute over how the CRA has interpreted the income tax law.
To file an objection, please select one of the following options:
File your objection online through CRA My Account (select My Company or Individual depending on your situation). Select “Register my formal dispute.” You will receive a case number to refer to when submitting supporting documentation or for further correspondence with the CRA.
Submit through your authorized representative. They will use Represent and Client to file a dispute on your behalf.
File by mail or fax using CRA Form T400A, Objection – Income Tax Act
Send a letter to the Appeals Director of the appropriate CRA center to receive the appeal
You will need to explain why you disagree with their assessment and provide all relevant facts and documents.
People must file their objection based on which of these two dates occurs later:
one year after the deadline for filing the return; either
90 days from the date of your notice of assessment or determination.
If your objection is to a Tax-Free Savings Account (TFSA) or Registered Retirement Savings (RRSP contributions), the deadline is 90 days from the date of your notice of assessment.
Registered companies must apply within 90 days of the date of notification of the assessment or decision.
If you do not file your objection in time, you can request an extension. The appeals officer would consider the circumstances that led to you missing the deadline, including if you cooperated with the CRA office responsible for submitting your assessment before objecting, or if you can request an extension for reasons beyond your control.
You can request an extension at the same time as filing an objection. You may request an extension of up to one year after the objection deadline has expired by writing to the Chief Appeals Officer at your Appeals Reception Centre.
Objections are handled on a case-by-case basis, and the time it takes to process your objection depends on its complexity and the time it takes to respond to any request for information.
If the CRA accepts your objection in whole or in part, it will amend your tax return and send you a revised Notice of Reassessment. Otherwise, you will receive a written notification confirming the original CRA tax assessment.
If you disagree with the CRA’s decision on your objection, you can appeal to the Tax Court of Canada.
If your case fails in the Tax Court, you can take it to the Federal Court of Appeal and ultimately seek leave from the Supreme Court of Canada.
The entire appeals process can be daunting and require a lot of time and expense if you handle it yourself.
Generally, you do not have to pay income tax amounts that are subject to review until the CRA has completed its review of your objection.
However, you must pay if the amounts you are disputing are taxes that you had to withhold and remit, such as payroll taxes.
If your objection concerns a charitable donation tax credit, you must pay half of the disputed amount. You must confirm this with the CRA in advance.
When your objection has been decided, you must pay all amounts owed, including taxes, penalties, and interest.
If the review decides in your favor, you can ask the credit rating agency to reimburse you if:
Consider working with a tax expert when dealing with Canada Revenue Agency assessment.
