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Be Prepared for the Tax Re-Assessments

Tax Re-assessment after filing

Once you get your taxes filed then you can sit back and wait for your assessment.   Eventually it arrives and it all appears to be good.   So you file it away and figure you are done for another year.   Then all of a sudden some time through the summer you receive another piece of mail from the CRA.

Now they are asking for more information regarding your latest tax filing.   You quickly scan it over and figure they must have made a mistake. After all you received your tax assessment and everything was fine.   So you just put this request for information aside and forget about it.   Then a few weeks later yet again you receive another piece of mail from the CRA and this time it’s a notice of Re-Assessment, and this time you owe them money.

Now you begin to pay real attention as to what is going on here.   What has happened is this. W  hen you file your taxes the government quickly peruses them and if nothing seems wrong then they go ahead and issue you your assessment.   Then in the summer months when their busy season is past they randomly scrutinize some taxpayer’s returns.   You happened to be one of them.   They have decided they want to see more information backing up your claim.   This may be medical receipts or other types of paperwork.   Remember that letter you got asking you for more information that you thought was a mistake so you ignored it?   Well you didn’t comply with the request so they denied your expenses pertaining to it, and that is what your Re-Assessment will reflect.

Now you really don’t want to ignore this any further.   If you disagree with the re-assessment then you need to file a form T400A objection.   This gets mailed to the chief of appeals.   You must fully explain the reasons for your appeal and provide as much documentation as possible to support your argument.

If you win your appeal then your tax is adjusted accordingly.   If it is denied then you can appeal to the Tax Court of Canada for a further consideration. If the amount is less than $25,000 that is being disputed then you will be given an informal hearing, however whatever is determined in this hearing is binding just the same way a formal court hearing is.   The great advantage about the informal hearing is, that you probably won’t need a lawyer to represent you and that you will be able to explain your case on your own behalf.

If you have received a notice to supply more information the best step is to comply as quickly as possible.  Hopefully you used a quality accountant to help you prepare your return, and if so then they can also assist you with advising you as to what documents the CRA is actually looking for and whether your Re-Assessment is valid.

 

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Sam Seidman, CPA, CA, LPA
629 Sheppard Avenue West
Toronto, Ontario
M3H 2S3

Telephone: (416) 398-1700
Fax: (416) 398-6226

Chartered Professional Accountant, Chartered Accountant, Licensed Public Accountant

Email: sam@torontoaccountant.ca

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The information provided here and throughout the site of TorontoAccountant.CA is intended for general tax information only, and should not be misconstrued as a legal source of information regarding your tax situation, or be used for any other purposes other than for general information.
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