Receiving a Notice of Reassessment from the Canada Revenue Agency (CRA) can be unsettling and raise many questions. This document signals that the CRA has reviewed your tax return and made changes to the amounts reported. Understanding what a reassessment entails, why it occurs, and how to respond effectively is crucial to managing your tax affairs and avoiding penalties or interest. This detailed guide explains the purpose of a Notice of Reassessment, common reasons it is issued, its implications, and steps you should take after receiving one.
What Is a Notice of Reassessment?
A Notice of Reassessment is an official document sent by the CRA to taxpayers after they have reviewed your filed tax return. It indicates that the CRA has made changes to your original assessment, which may affect your tax owing, refund, or credits.
The reassessment can:
- Adjust your reported income, deductions, or credits
- Increase or decrease the amount of tax you owe
- Correct errors or omissions in your original return
- Reflect changes based on additional information received
Why Does the CRA Issue a Reassessment?
The CRA reassesses returns for several reasons, including:
- Errors or Omissions: Mathematical mistakes or missing information identified during review.
- Information Matching: Discrepancies between your reported income and third-party data such as T4 slips, T5 slips, or employer reports.
- Audit or Review: Results from a CRA audit or verification process.
- Late Filed Information: Additional slips or information received after your initial filing.
- Voluntary Corrections: Corrections you or your representative submitted after your original return.
What Does a Notice of Reassessment Include?
A typical Notice of Reassessment contains:
- Your personal details and tax year under review
- The original amounts reported on your return
- The changes made by the CRA, including adjustments to income, deductions, credits, and tax owing/refund
- The new balance owing or refund amount
- Details of any interest or penalties applied
- Instructions on how to respond or appeal
How to Read Your Notice of Reassessment
When you receive a reassessment:
- Compare it to your original return: Identify what has changed and why.
- Review explanations provided: The CRA usually explains reasons for adjustments.
- Check amounts owing or refunded: Determine if you owe additional tax or are receiving an additional refund.
- Note any deadlines: For payment, appeals, or providing additional information.
What To Do If You Agree With the Reassessment
If you agree with the changes:
- Pay any outstanding balance by the due date to avoid interest and penalties.
- Keep a copy of the reassessment for your records.
- If the reassessment results in a refund, expect it within weeks after the notice date.
What To Do If You Disagree with the Reassessment
If you disagree with the reassessment, you can:
- Request a Review: Contact the CRA to discuss the reassessment. Sometimes, errors can be resolved informally.
- File a Notice of Objection: Formally challenge the reassessment within 90 days of the notice date using Form T400A.
- Gather Supporting Documentation: Collect all relevant documents to support your position.
- Consult a Tax Professional: For complex disputes, seek advice from a tax accountant or lawyer.
Common Reasons for CRA Reassessment
- Unreported income from employment, investments, or self-employment
- Disallowed or insufficiently supported deductions or credits
- Incorrect reporting of benefits or taxable allowances
- Math errors or missed slips
- Late or amended slips submitted by employers or financial institutions
How Long Can the CRA Reassess Your Return?
The CRA generally has three years from the date of your original notice of assessment to reassess your return. However, this period can be extended:
- If you file a waiver
- If there is suspected fraud or misrepresentation
- For returns filed late, the reassessment period can be longer
Preventing Reassessments
To reduce the likelihood of reassessment:
- File accurate and complete returns using CRA-certified tax software or professional help.
- Ensure all slips and income sources are reported.
- Keep detailed records and supporting documentation.
- Review your return carefully before filing.
Conclusion
A Notice of Reassessment from the CRA is a normal part of the tax process and does not necessarily mean you made a mistake. It is the CRA’s way of verifying returns and ensuring compliance. Understanding the content and implications of a reassessment helps you respond appropriately—whether that means paying additional tax, receiving a refund, or disputing changes. Stay organized, keep good records, and seek professional advice if needed to manage reassessments confidently and protect your financial interests.
