Special thanks goes to MG for providing this post on what you can do if you don’t agree with your Notice of Reassessment.
It’s April and you’ve filed your tax return, happily expecting your refund. You get a Notice of Assessment from the CRA and your refund, and everything is well in the world.
Until… October rolls around, you receive notice that you’re getting audited. Or, CRA requests documentation to back up one of your deductions, but your dog ate the paperwork. The outcome of this little slice of hell is that your taxes are getting reassessed for the worse (for you, that is). Now what?
First, talk with the CRA and with a tax professional such as an accountant. Find out what the rules are as they relate to the changes CRA has made to your return, and do your best to learn everything you can about why you’ve been reassessed. The CRA should be able to provide you with the information that led to the reassessment, and you might find out that your deductions weren’t valid after all. Or, you might decide that CRA is being unreasonable and that you want to appeal their decision further.
File A Notice of Objection
The Income Tax Act has a process for dealing with disagreements for tax assessments, which is thoroughly explained in this brochure published by the CRA. The first stage is to file a “Notice of Objection” with the Chief of Appeals at CRA. The “Appeals Branch” at CRA is comprised of different employees than those who conduct audits or handled your original assessment, so they (in theory, at least) will be taking a fresh look at the assessment to determine if it was correct under the law. Because the Income Tax Act is large and complicated, it’s quite possible that CRA misinterpreted the law and assessed your taxes wrongly.
Think of the Objection like this: you’re telling the CRA “Hi there, you screwed up. Please fix your mistake. Here’s why you got it wrong.” Filing an Objection gives the CRA a chance to look at the assessment with fresh eyes, and determine if a mistake was made in the assessment.
Why would you bother doing this? The answer is simple: if you don’t object to the assessment, the law deems that it is correct and that you owe the taxes. If you disagree with the CRA the Objection is the formal way to let CRA know of the dispute and allow them to respond. It’s your one and only chance to straighten out a mistake. If you don’t object, you’re legally obliged to pay the taxes that CRA says you owe, even if they made an error in that assessment.
Filing The Objection
So, how do you file an Objection? You don’t have to use a specific form, but it’s probably a good idea to use the form provided by CRA and send it to the right address (see Appendix B in the above-noted brochure). Send the Objection promptly – the time limit is 90 days after the Notice of (Re)Assessment was mailed to you, or one year after filing deadline for the tax year in question (i.e. April 2010 for your 2008 tax return), whichever is later. Even if you’ve been in discussions with the CRA and they’ve promised to reassess you in your favour, file the Notice of Objection anyway – it protects your right to appeal further. It doesn’t cost anything to file it, and you can always withdraw it later.
The objection should briefly state what you’re objecting to and why. The Objection should include the following information:
- Your name and address;
- a daytime telephone number
- the date of your notice of assessment;
- the taxation year (if applicable);
- your social insurance number or Business Number;
- the facts and reasons for your objection;
- all documents that support your objection; and
- the name and address of your authorized representative (if applicable)
- Your signature and the date.
As always, keep a copy of everything you send – you never know what might get lost in the mail. A CRA employee may contact you or your representative to get further information regarding the objection to ensure they can make a well-informed decision. Keep the Notice of Objection factual and to the point – say what you’re claiming, why you’re claiming it, and why it should be allowed under the provisions of the Income Tax Act.
The result of the objection will either be a reassessment of your taxes if the Appeals Branch agrees that a mistake was made or a notice that confirms the previous assessment. If you aren’t fully successful in the objection, you can appeal the decision to the Tax Court of Canada.