Understanding the CRA Notice of Assessment
How to object if you think the CRA is wrong
Most of us have received our Notice of Assessment from the CRA for our 2020 tax returns. Mostly it’s petty much as you expected – a refund or no balance owing. But sometimes the CRA sends you an unfavourable Notice of Assessment. Here’s what to do.
Looking at the Notice of Assessment
First, look on the Notice, under the heading “Explanation of changes and other important information.” In the vast majority of cases, this explanation is computer-generated, and much of the “explanation” you find on the page may actually have nothing much to do with the discrepancy.
Next, look for something that “doesn’t ring a bell.” In fact, at this stage, the vast majority of problems relate to some type of clerical error. If your return was not prepared with tax-filing software, you may have simply made a calculation or entry error, or perhaps a CRA clerk has simply entered the wrong number in the wrong field on their computer. In other cases, there may be problems with the application of installment remittance (e.g., CRA has applied it to the wrong year or, worse still, to a different taxpayer). Other discrepancies might include a late-filing penalty even though you filed on time.
If you still don’t know what’s going on, look at the “Summary” calculations contained in the Notice. On the left-hand side of the page, you will see key box numbers from your tax return, with CRA’s calculations on the right-hand side of the page. Compare these with your return on a line-by-line basis – you should be able to quickly zero-in on where the discrepancy is.
If you still don’t know what’s going on, one option is to try calling the Tax Services Office using the toll-free number given, and ask them what the problem is (of course, another option is to go to an accountant). If and when you get through to a live person on the line, don’t assume you are dealing with an expert on the matter in question. This simply isn’t the case. In many cases, the CRA employees who staff the call-centre lines may not have particular expertise in your problem and will certainly not be familiar with your tax return.
Once you understand the problem and you still think that you’re in the right, contact CRA by writing an enquiry to the Tax Centre to which you sent your return, directed to the attention of the Enquiries and Adjustments Division at the address on the front of the notice. The Notice of Assessment itself indicates that if the problem can’t be resolved, you can find more information on how to register a formal dispute at the CRA website. The CRA does not offer walk-in counter service at any Tax Services Office, so you’ll have to try to resolve a dispute by mail, phone, or online.
The Notice of Objection
If your dispute is based upon a different interpretation of the law, you have to file a Notice of Objection on a timely basis. Once a Notice of Objection has been filed, collection procedures eventually stop. When contacting the CRA I suggest the following:
In your letter, be sure to include your Social Insurance Number, phone number, and name and address. Provide any reasons or details and whatever backup documentation may be relevant, even if you have already included it with your tax return. What you want to do is give the CRA adjuster a “self-contained package” so that he or she can zero in on the problem.
In general, you should keep your correspondence with CRA factual and to the point. CRA’s interest is in resolving the dispute as quickly as possible. They don’t want to hear your life story, or what you think of the government and our tax system.
In many cases, your letter may be sufficient to clear up the matter in your favour. But if it becomes necessary to actually talk to a CRA auditor, always be courteous and to the point, avoiding heated demands or arguments. Getting along well with CRA goes a long way towards a successful resolution – in your favour.
Samantha Prasad, LL.B., is a Partner with Toronto law firm Minden Gross LLP, a Meritas Law Firm Worldwide affiliate, and specializes in corporate, estate, and international tax planning. She writes frequently on tax issues, and is the co-author of Tax and Family Business Succession Planning, 3rd Edition. She is also co-editor of various Wolters Kluwer Ltd. tax publications. A version of this article first appeared in The TaxLetter, © 2019 by MPL Communications Ltd. Used with permission.
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The foregoing is for general information purposes only and is the opinion of the writer. This information is not intended to provide specific personalized advice including, without limitation, investment, financial, legal, accounting or tax advice.