Canada Revenue Agency Notice of Assessment

Your Tax Return Summary has Important Information

Tax Summary
Peter Dazeley / Getty Images

Definition:

The Notice of Assessment is the form that the Canada Revenue Agency sends to all taxpayers after processing their returns, summarizes the results, and states the amount of taxes to be paid or refunded.

Sections of the Notice of Assessment include:

1) Explanation of Changes and Other Important Information

If the Canada Revenue Agency has made any corrections to your income tax form or GST/HST rebate application, this section explains what changes have been made.

Also listed are any important changes for the upcoming tax year and any other issues relevant to your tax situation such as:

  • Reminders about installment payments
  • Information about unused capital losses

2) Registered Retirement Savings Plan (RRSP) Deduction Limit Statement

This section summarizes your RRSP contributions for the tax year including any unused contributions (which are carried over into the next tax year). It also shows your RRSP deduction limit (the maximum you can contribute to an RRSP) for the next year, based on information the CRA has compiled from tax returns filed in previous years. 

3) Summary

The assessment summary shows a line-by-line summary of your tax return, including total income, tax payable, and whether you have a refund or balance owing. The following example summary shows a refund of $3,538.02 (Credit) owing to the taxpayer:

Summary
LineDescription$Amount
150Total Income$63,890
 Deductions from total income$17,356
236Net income$46,534
260Taxable income$46,534
350Total federal non-refundable tax credits$2,965
6150Total British Columbia non-refundable tax credits$1,119
420Net federal tax$3,655.16
421CPP contributions payable$4,712.40
428Net British Columbia tax$1,094.42
435Total payable$9461.98
437Total income tax deducted$0.00
476Tax paid by installments$13,000.00
482Total credits$13,000.00
 (Total payable minus total credits)$3,538.02
 Balance from this assessment (CR)$3,538.02
 Refund transfer$3,538.02
 Balance$0.00

 

See How Long Does a Tax Refund Take After You File Canadian Income Tax?

Disputing Your Assessment

If you disagree with the Notice of Assessment you have received, the first thing to do is to contact the Canada Revenue Agency (CRA).

If you still disagree after discussing the matter with the CRA, you can make a formal objection, as long as you do it within ninety days of the date of the Notice of Assessment.

You can do so online at My Account, or My Business Account (if you are a corporation) and selecting "Register my formal dispute". Note that you will have to provide an explanation of why you disagree with the assessment, including any supporting documentation. You do not have to pay any disputed tax owing until the CRA completes the review process.

CRA Reviews 

The CRA may at any time before or after issuing the Notice of Assessment request additional information to support your claims for income and expenses. If you have filed online you may (for example) be requested to provide receipts in support of claims for business or medical expenses. If you cannot provide supporting documentation the CRA may reassess your tax return.

CRA Audits

In some cases the CRA may decide to conduct an audit of your business and/or personal finances. This can occur if they suspect that you have under-reported income and/or over-reported expenses, or in many cases you may be randomly selected for an audit either individually or as a member of a targeted business group.

An audit consists of a full-scale examination of the revenue and expenses you (and possibly your spouse) have declared on your tax returns. You must retain your tax records and supporting documents for six years from the end of the current tax year. If the audit reveals discrepancies in your tax returns you can be reassessed for current and prior tax years.

See 10 Red Flags That Will Get Your Canadian Small Business Audited for further information. If your small business has been selected for an audit see Canadian Small Business Being Audited? 10 Things You Need to Know for information on how to prepare.

Common Misspellings: Notice of assesment, notice of asessment.

Examples: Is there anyone who doesn't enjoy seeing that they're going to get a tax refund on their Notice of Assessment?

Continue Reading...