Did you recently receive any type of letter or notice from the Canada Revenue Agency (CRA)? If so, it is imperative that you take a proactive approach. The sooner you take action, the easier it will be to address the issues. Taxes are merely a problem to be solved. You do not have to figure out everything on your own. At Padgett, we are committed to providing solutions-focused tax advisory services to clients. If you have any specific questions or concerns about how to deal with a CRA letter or notice, we are here as a resource. Here, our advisory team provides a guide to get you started.
What to Do When You Receive a Letter from the CRA
The Government of Canada explains that a Notice of Assessment is the summary of the calculated amounts for your income tax and benefit return. You could also receive a Notice of Reassessment or other types of notices or letters, including one that states that you owe money to the government. Receiving a letter from the CRA can be stressful, but most notices are routine. The key is to stay calm and take clear, deliberate steps. Here are key things to do after getting a letter from the CRA:
- Read the Letter Carefully: Start by reviewing the entire notice to understand what the CRA is asking for. Look at the date, the tax year in question, and any stated deadline. Make sure that you take the time to understand what is actually in the notice.
- Verify the Source: Confirm that the letter is authentic. CRA correspondence typically arrives by mail or through your CRA “My Account.” Why is this so important? Scams happen. You should be alert for fraud. Remember. CRA will never ask for payment via e-transfer or gift cards.
- Understand the Request: Some letters simply confirm details or provide information (like a Notice of Assessment), while others require additional documents or corrections. If you do not understand what you received, you should speak to a tax professional right away.
- Check the Deadline: CRA letters usually give a specific time frame for response. The most common deadline is 30 days. Though, there are some letters that have different deadlines. Missing a deadline can lead to penalties or loss of appeal rights. A proactive approach is key
- Gather all Supporting Documents: If the CRA requests receipts, slips, or records, begin collecting them right away. The sooner you prepare, the easier it is to meet deadlines. The more information you have, the better positioned that you will be to protect your interests. Alternatively, you may ask your accountant who filed your return to do this. CRA normally does some test checks for supporting documents where returns have been e-filed. It’s important to send these requests promptly to your advisor in that case.
- Respond Promptly and Professionally: Draft a clear response. If you are unsure how to reply, work with a tax professional to ensure accuracy. You do not have to navigate the process alone. An experienced Canada tax professional can help.
Top Types of CRA Letters (and How to Respond to Them)
Not all Canada tax notices are the same. Quite the contrary, the CRA issues many different types of letters and notices. Here are some of the most common notices and what you should know about preparing a response to it:
- Notice of Assessment (NOA): An NOA is issued after you file your tax return, this confirms how the CRA calculated your taxes. Compare it to your return. If you disagree, you may file an objection within 90 days. Though, no response is required if you agree.
- Notice of Reassessment: This notice is issued if the CRA reviews your return and makes changes (for example, denying a deduction). You should review the reasons, and if incorrect, file a Notice of Objection. You have the right to challenge a reassessment. You may also ask your tax accountant to review CRA’s proposed changes to ensure it’s correct.
- Pre-Assessment Review Letter: A pre-assessment is sent before your return is processed, asking for supporting documentation (like donation receipts). You can respond by submitting the requested documents by the deadline.
- Post-Assessment Review Letter: This type of letter is sent after processing your return, asking for proof of claims. Once again, you can respond by submitting the required documentation quickly to avoid reassessment.
- Collections Letters: A collection letter is a type of notice that is issued if you (allegedly) owe taxes. These outline the amount due and potential enforcement actions. If you cannot pay in full, you should contact the CRA to arrange a payment plan.
- Audit Letters: Audit letters are designed to notify you that the CRA is auditing your return. Notably, these are more detailed and serious. If you are facing an audit, you should speak to a tax professional right away.
Why You Shouldn’t Ignore a CRA Notice of Assessment
A Notice of Assessment (NOA) is one of the most important documents the CRA issues. It confirms how your return was processed and establishes the official record of what the CRA believes you owe or will be refunded. Even if everything appears correct, you should always review it closely. Small errors (such as missed credits, unreported slips, or carry-forward issues) can have big financial consequences if left unchallenged. Ignoring an NOA (or any CRA notice) can also cost you your right to dispute it. Under the Income Tax Act, all taxpayers have 90 days from the date of the NOA to file a Notice of Objection if they disagree with the assessment. You do not want to miss your chance to challenge a CRA decision.
Padgett Can Help With CRA Letters and Notice
If you received a letter or a notice from the CRA, the time to take action is now. There are many options available for resolving these types of issues; but tax issues are always time-sensitive. At Padgett, we put the time, resources, and attention to detail into each and every case. No matter your circumstances, our Canada tax professionals have the experience that you can trust. Your initial consultation is fully confidential and carries zero obligations.
Contact Our Tax Advisory Team for CRA Letters Today
At Padgett, our tax advisory professionals have the skills and experience to help clients solve problems. If you have any questions or concerns about dealing with CRA letters or CRA notices, we are here to help. Contact us today to find the nearest accountant to you for a completely confidential, no obligation initial consultation. Our firm helps people and small businesses solve tax problems throughout all of Canada.