CRA Reassessment: What To Do If the Canada Revenue Agency Wants to Review your Taxes
The Canada Revenue Agency can review your return after it has initially been assessed. Find out what you need to know about CRA reassessment
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What You Need to Know About a CRA Reassessment
A CRA reassessment is a situation where the CRA (Canada Revenue Agency) goes back to look at your tax return after it has initially been assessed. When you initially file your tax return, the CRA looks at it, completes a review, and sends you a Notice of Assessment. In a lot of cases, this is the only assessment that you will receive.
However, the CRA is legally able to go back and look at your return later on. If it does, and if the agency finds something that it does not agree with, the CRA can issue a Notice of Reassessment.
If you receive a Notice of Reassessment, it will replace your Notice of Assessment.
Why Does a CRA Reassessment Happen?
There are many reasons why the CRA may choose to reassess a tax return.
- One is due to the CRA matching program. Under this program, the CRA compares the numbers on your return to the numbers that it has on file. For instance, it compares the amount that you listed as your income to the amount that your employer listed.
- A part of the matching program is the Beneficial Client Adjustment Initiative. This is where the CRA looks for credits that have not been claimed as tax deducted at source, as well as contributions to the Canada Pension Plan. If the CRA finds a difference between the numbers you listed on your return and the numbers provided by your employer or bank, it will issue a reassessment.
- The CRA may also reassess a return if it determines that the numbers you provided are drastically different from prior year returns, or if your return includes claims in areas where taxpayers frequently make errors.
- Finally, your return may be chosen for CRA reassessment randomly.
A CRA reassessment doesn’t necessarily mean that the agency believes you willfully listed incorrect information. Many tax reassessments are due to inadvertent errors. However, if the CRA believes that you purposely filed incorrect information to avoid paying taxes, you can be charged with tax evasion.
How Far Back Can the CRA Look?
There are limits to how far back the CRA can look at a tax return. In general, the CRA is able to go back, review, and potentially reassess a tax return at any time within three years of the initial Notice of Assessment. However, if the agency suspects fraud, negligence, or carelessness it can go back farther.
What Can You Do if You Are Reassessed?
If you receive a CRA reassessment and you agree with it, you can simply pay the taxes owing and move on. However, if you disagree, you have 90 days to object by filing a formal Notice of Objection. If you decide to do so, you will be required to provide documentation to support your case.
It is best to work with an experienced tax professional when you file a Notice of Objection. Navigating the complex CRA processes and effectively communicating with the CRA can be time-consuming, difficult, and potentially dangerous. You do not want to risk costing yourself by attempting to handle the CRA on your own.
At Farber Tax Solutions, we have the experience and skill needed to give you the best chance at a successful objection. Contact us today for more information on how we can help
Farber Tax Solutions can help you successfully deal with CRA problems. We utilize the experience of our tax experts to:
- 1| Offer a comprehensive solution that is focused on achieving the most favourable possible outcome for your tax issue;
- 2| Communicate with the CRA on your behalf and navigate the entire CRA dispute process; and
- 3| Offer a complete solution to your tax problems, including ex-CRA professionals and tax lawyers from Farber Tax Law.