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You’ve received a Notice of Reassessment from the CRA — What should you do?

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Brendan J. Thielmann

Receiving a Notice of Reassessment (NOR) from the Canada Revenue Agency (CRA) can be unsettling. Questions such as what a Notice of Reassessment is, why you received one, and what steps to take next are common. This article will provide you with the information and actionable steps needed to identify the best way to approach an NOR in a calm, calculated manner. It will also explain when it makes sense to seek professional advice.

What is a Notice of Reassessment?

An NOR is an official statement issued by the CRA which indicates changes to your tax return after its initial assessment. The NOR will have a similar format to your typical Notice of Assessment, and will provide you with a summary of the changes made by the CRA. These possible changes could indicate that you owe additional taxes, are entitled to a refund, or that there have been adjustments to credits or deductions claimed on your tax return. It is important to note that receiving a NOR does not necessarily mean you have done something wrong - the CRA issues reassessments for a variety of reasons, many of which are routine. What matters is the underlying reason for your NOR.

Why have you been issued a Notice of Reassessment? 

There can be many reasons why the CRA may have issued you a NOR. The CRA may have obtained new information —  such as a T4 slip — that does not match the income reported on your initial return. The CRA may also take the position that certain deductions or credits claimed on your return are incorrect or ineligible. Finally, there may have been clerical errors in the initial assessment that the CRA is correcting. 

What steps should you take to address a Notice of Reassessment?

1. Upon receiving an NOR, the first step should be to review the NOR carefully. You should compare the NOR to the initial Notice of Assessment to understand what changes the CRA made. The NOR contains an “Explanation of Changes” section, which you should be sure to highlight. Understanding the changes made by the CRA will help inform you of what steps to take next. Make note of the date printed on the NOR, as your deadline to object if you choose to dispute the reassessment begins on this date.

2. Understanding the CRA’s reasons for the changes in the NOR will allow you to take the first concrete steps necessary to address the NOR: gathering the relevant documentation. If the NOR is based on unreported income or disallowed credits, you should gather any information relating to this to better evaluate the NOR. This could include items such as income slips, receipts, invoices, or bookkeeping reports. This will allow you to better analyze the NOR, and see if the CRA is correct in its reassessment. If the amounts involved are significant or the issues complex, this is a good point at which to consult a tax lawyer or accountant before deciding how to proceed.

3. Once you’ve got an understanding of the changes made in the NOR, and relevant documentation relating to those changes, you are left with two options.

Agree with the changes in the NOR: If, upon review of the NOR and relevant documents, you find that the NOR is accurate, you can accept the changes made in the NOR. If the NOR requires payment, it would be best to pay the outstanding amount immediately to avoid the accrual of interest. If you are unable to pay the full amount at once, the CRA does offer payment arrangements — contact the CRA directly to discuss your options, or ask your tax lawyer or accountant to do so on your behalf. 

Disagree with changes in the NOR: If you disagree with the NOR, and think the CRA has made an error, you have the right to dispute the NOR. To do so, you need to file a formal objection to the CRA, which is done by submitting a Notice of Objection in the prescribed form. You can either print and mail a Notice of Objection to the Chief of Appeals, or you can file an objection electronically using the “Register my formal dispute” option in the online My Account portal. 

4. If you want to submit a Notice of Objection, there are a few things to be aware of:

First, there is a deadline to file the objection. For individuals, you have one year after the date of the return’s filing due date for the year, or 90 days after the NOR has been sent — whichever is later. Missing this deadline can limit your options and could result in you having to pay the assessed amount even if you believe it is incorrect.

Second, in filling out your Notice of Objection, you should be sure to be as accurate and detailed as possible, and include any supporting documents that might be relevant, such as receipts or invoices. Your objection should clearly identify the specific items in the NOR you are disputing and explain, with reference to your supporting documents, why you believe the CRA's position is incorrect.

Third, once the Notice of Objection has been filed, you will be able to track the status of the objection on the “Progress Tracker” within the online My Account portal. The CRA will appoint an Appeals Officer to review what you’ve submitted, and will then provide you with a response. If the objection was filed within the prescribed time limit and there are no other procedural issues with it, the CRA will either agree with your objection and issue a reassessment, or they will disagree and issue a notice of confirmation indicating that the NOR was correct. 

Fourth, if you disagree with the determination of your objection by CRA’s Appeals department, you can appeal CRA’s decision to the Tax Court of Canada. There is also a 90-day deadline to file a Notice of Appeal to the Tax Court, beginning from the date printed on notice of confirmation issue by CRA.  Appeals to the Tax Court of Canada are formal legal proceedings, and it is highly advisable to consult a tax lawyer before taking this step.

Conclusions and Takeaways

Receiving an NOR can be stressful, but understanding the process puts you in a much better position to respond effectively. Whether you ultimately agree with the CRA's position or decide to dispute it, acting without delay and keeping organized records are the most important things you can do. Upon receiving a NOR, it is important to take the matter seriously and address the NOR promptly, as the deadline to file a notice of objection is typically the later of 90 days from the date of the NOR or one year from the filing due date for the tax year in question. 

Fillmore Riley LLP’s Taxation Practice

We offer tax advice to both individual and business clients on a wide range of matters, including corporate and commercial transactions, estate planning, tax dispute resolution and litigation. For more information or if you have any questions, please contact a member of the Fillmore Riley Taxation practice.
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