Key Takeaways
A Notice of Reassessment explains changes the CRA made to your assessed tax return. Review the revised amounts, understand the reasons, and act promptly if you disagree.
Compare the revised figures with your original Notice of Assessment.
Check changes to your balance, refund, interest, or penalties.
Gather supporting records and confirm your objection deadline.
File a formal objection if you disagree with the changes.
Receiving a Notice of Reassessment from the Canada Revenue Agency (CRA) can raise questions about your tax return and what you owe. The notice explains changes the CRA made to a return it previously assessed. Depending on those changes, you may owe additional tax, receive a smaller refund, or face interest and penalties.
A reassessment does not always mean you made a mistake. The CRA may have identified a discrepancy, reviewed a claim, or adjusted information on file. Understand why the CRA changed your assessment to decide what to do next. Review the notice carefully and act promptly if you disagree with the changes.
What is a Notice of Reassessment?
A CRA Notice of Reassessment (NOR) is a document issued when the CRA changes a tax return it has already assessed. Your original Notice of Assessment (NOA) summarizes the CRA’s initial assessment. The NOR shows the revised figures after the CRA reviews new information or makes an adjustment.
Individuals, corporations, and other taxpayers receive an NOR when the CRA changes their reported income, deductions, credits, or tax payable. For example, the CRA might disallow a deduction or adjust a tax credit. It may also identify income you did not report on your original return.
The notice outlines the changes and explains how they affect your tax position. You might owe additional tax, receive a smaller refund, or face interest and penalties. In some cases, the reassessment may result in a larger refund or a lower balance owing.
Compare the notice with your original NOA and review each adjustment. Check the CRA’s reasons and whether the revised figures match your records. This comparison helps you decide whether to accept the changes or challenge them through the formal objection process.
When and Why Does the CRA Reassess a Tax Return?
The CRA reassesses your tax return after an initial review or when it receives new information. Depending on the circumstances, you may receive a Notice of Reassessment months or years after filing. The CRA has a limited period to reassess a return, although exceptions apply and the deadline varies by taxpayer. A reassessment does not always mean you made an error or violated tax rules.
Common reasons for reassessment
The CRA may reassess your return for several reasons. For example, information from an employer, financial institution, or other third party may not match the amounts you reported. The CRA may also adjust deductions or credits after reviewing your supporting documents. In other cases, it may correct an error or identify income you omitted from your return.
An audit can also lead to a reassessment. The CRA can audit your records and tax reporting in greater detail to check whether you have met your tax obligations. If the auditor identifies proposed changes, the CRA will send a proposal letter explaining the findings and give you an opportunity to respond before it finalizes the reassessment. If the CRA proceeds with the changes, it issues an NOR.
Reviews and audits are different
A CRA review usually checks specific claims or information on your return. An audit involves a more detailed examination of your tax records and reporting. Either process may lead to an adjustment, but not every review becomes an audit.
If you receive a reassessment, read the notice and related CRA correspondence to understand what changed and why. Keep receipts, statements, and other supporting records in case you need to clarify the information or dispute the decision.
What Should You Do After Receiving a Notice of Reassessment?
Review the NOR and the changes before deciding how to respond. Taking the steps early can help you identify errors and avoid missing important deadlines.
1. Compare the notice with your original assessment
Start by comparing the Notice of Reassessment with your original Notice of Assessment. Look at changes to your reported income, deductions, credits, and total tax payable. Check whether the CRA changed your refund or balance owing, and review any added interest or penalties. This comparison helps you understand how the reassessment affects your finances.
2. Review the CRA’s reasons and gather your records
Read the explanation on your notice and any related letters from the CRA. Identify why the agency made the adjustment and check whether the calculations match your records. Gather tax returns, receipts, invoices, bank statements, and other supporting documents. If you believe the CRA misunderstood your information or made an error, these records can help you explain your position.
3. Decide whether to accept or dispute the changes
If you agree with the reassessment, follow the payment instructions or review how the revised refund will be handled. If you disagree, you can file a formal Notice of Objection with the CRA. Explain which changes you dispute, why you believe the assessment is incorrect, and which facts and documents support your position.
For individuals and corporations, the deadline is 90 days from the date the notice of reassessment was issued.
If you miss the deadline, you may request an extension within one year and 90 days from the date of the notice of reassessment. But the CRA does not have to grant the extension. Contacting the CRA to discuss the reassessment does not replace filing a formal objection or extending your deadline.
Filing an objection does not eliminate payment obligations. The CRA may postpone the collection of disputed income tax amounts until 90 days after it sends its decision on the objection, although exceptions apply. Interest can accrue, and large corporations must pay 50% of the disputed amount. Check the rules that apply to your situation before deciding how to proceed.
Move Forward With a Clear Plan
A Notice of Reassessment can affect your tax balance, refund, and financial plans. Review the changes carefully and keep records that support your position. If you disagree with the CRA’s decision, act promptly and confirm your objection deadline. A well-supported response can help address the disputed adjustments.
If you are unsure how to respond or need help challenging the CRA’s decision, Blachford Tax Law can help you understand your options and determine your next steps. Contact us to discuss your situation with an experienced tax lawyer.
FAQs
1. Does a Notice of Reassessment mean I made a mistake?
No. The CRA may also reassess your return because of new information, a review, or an adjustment.
2. How long do I have to dispute a reassessment?
Taxpayers have 90 days from the date the notice of reassessment was issued, plus an additional year to apply for an extension of time to file an objection. See the CRA’s objection guidelines.
3. Do I have to pay if I dispute a reassessment?
The CRA normally postpones collecting disputed income tax amounts while it reviews an objection, but exceptions apply, and interest continues to accrue. Check the rules for your situation and learn more about paying CRA tax debt while disputing an assessment.