Disputing Your Notice of Reassessment

by Tax Guy - Burlington Accountant on April 22, 2009 Print This Post Print This Post

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?

Get Help

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 Bother?

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.

What’s Next?

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.

About The Tax Guy...

Dean Paley CGA CFP is a Burlington accountant and financial planner who services individuals and business owners locally, nationally and internationally. Dean has appeared in the National Post, Toronto Star and Metro News.

To find out more, visit Dean's website Dean Paley CGA CFP or connect via Twitter @DeanPaleyCGACFP.

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{ 15 comments }

Bhupesh Patani May 4, 2010 at 7:11 am

Superb explanation with every detail.
Thanks
Bhupesh

Patricia July 6, 2010 at 9:46 am

I am filing an objection as suggested by a CRA agent as I was the victim of a tax shelter scheme which is before the court..if this does result in some kind of leniency towards the victims, I will at least perhaps be given some kind of reduction in the amount of tax owing. My plan is to arrange payment and then if it happens, receive a refund or reduction in the tax owing. I was assured by the company and the accountant that prepared my taxes that it was a legit programme..they had even the accountant believing…or maybe he knew the situation and didnt tell me…however, I am hoping my situation will be ruled in a favorable way and some of the money I am owing can be reduced.

Tax Guy July 7, 2010 at 6:35 am

Hi Patricia,
You should contact the shelter and see if they have a dispute process. This may end up in court, and you may have to repay the taxes.

Crisscross January 28, 2011 at 1:00 pm

Very clear article! I was re-assessed through a randon review and they were wrong – they missed my reports of investment income although they had been filed and were on record. I sent a notice of objection and it was acknowledged as being received. Months later I was asked by the appeals section to send a copy of schedule 4 to their office, which I did. Months went by again and I received a notice saying I hadn’t responded. So I called, and they said they had lost my letter because the wrong department had held it! Then, after several days they called to say I was correct and my penalities would be reversed. I was told that these random audits are often carelessly done, so make sure to object if you think you are right!

Frustrated February 9, 2011 at 7:45 pm

There must be a some kind of scam going on in the auditing department. They sent a reassessment saying that I did not report some investment income, which I reported, and every penny eaned was not only reported but I attach a note to the Schedule 4, explaing each item they say I did not report. If I do not object this reassessment and pay for it, I think they will pocket it, because they know well that this money does not belong to the government. The Ministrer should punich these criminals in their system. The taxpayers have to pay for thier wages and benefits for them to do these illegal act. Filing an objection cost us, honest taxpayers, time, office expenses etc which are not tax deductable.

Tax Guy February 10, 2011 at 4:26 pm

@Frustrated,
The CRA receives copies of your tax slips and matches the amounts reported on the slips with the amounts reported on your tax return. If the amounts are different (i.e. you report less that the tax slips report), you will automatically get reassessed.

You may have accidently placed an amount on a tax slip on a different line on your tax return.

Unfortunately, this is one of the shortfalls of a self-assessment system.

AM February 22, 2012 at 10:48 am

Hi,

I received a notice of reassessment but nowhere on it does it say the due date to repay what I supposedly owe. It only says I have 90 days to object. Since I do want to object, do I have to pay the amount outstanding first and then wait for them to review my objection? Or does this imply I have 90 days to make the repayment?

Tax Guy February 24, 2012 at 12:20 pm

The due date is immediately as they will asses interest from the date is was originally due. FOr individuals this is April 30th of the year following the tax year of the assessment.

Steve March 5, 2012 at 2:40 pm

I was re-assessed in 2010, for the years 2006-2008 and did not receive the notice in the mail. The first I heard of it was when CRA seized my bank account on 2 days notice. The thing is, I lost my job and was traveling around the country looking for work during the time period the reassessment would have been mailed, and I did not get it, had I received it, I would have filed an objection. The question I have is, is there a way to file an objection now? I did file an objection for 2005, so does it not seem reasonable that I would have filed for the subsequent years had I known about them?

Tax Guy March 5, 2012 at 4:24 pm

Steve,
You may be able to file for an extension of the notice of objection period on the grounds you were unable to act or instruct others to act on the objection.

If that is denied by the CRA, you can appeal to the Tax Court.

TS March 12, 2012 at 4:51 pm

Hi,

I am being audit from CRA about a health food business I operated in year 2008-2009. My accountant did not report any earning of the business to CRA. I asked my accountant why no earning is reported to CRA and he goes the money you made, which was about $800 for both years was not exceed to the amount you have on capital cost allowance.

My question to you is should I report the earning to CRA in the second audit if I do so, what will happen and would the CRA find something else to audit.

Tax Guy March 12, 2012 at 5:41 pm

The revenue and taxable income must be reported. The taxable income (earnings) could very well have been eliminated by a CCA deduction.

TS March 14, 2012 at 4:48 pm

Re: The taxable income (earnings) could very well have been eliminated by a CCA deduction.

Can you explain what you mean by the earning have been eliminated by a CCA deduction?

Does that mean it would not consider as a business anymore?

Tax Guy March 15, 2012 at 8:40 am

CCA is the Capital Cost Allowance which is the allowed depreciation for tax purposes. It has nothing to do with you being a business or not.

Angry October 16, 2012 at 2:08 am

My reassessment states that my previous employer made changes and that’s why u now owe.. What do I do in this case?

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