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What is an Arbitrary Assessment?

Arbitrary Assessment from Canada Revenue Agency

This is also known as a notional assessment or involuntary Canada Revenue Agency (CRA) tax assessment. If you have not filed your taxes on time then you could possibly be the receiver of one of these types of assessments. Basically it means if you haven’t filed your tax return then the CRA will complete the return and file it for you, and you can almost be certain that the results will not be in your favor.

One this type of assessment is done by the CRA it will become retroactive and the total amount you will owe will be the tax amount they have deemed that you owe plus applicable penalties and interest. Once this has all been compiled and you have been mailed the assessment, the CRA can then take whatever steps are necessary to collect this amount owing.

In order for them to complete this assessment they will use whatever documentation available to them to assist them.  It could be based on previous year’s tax returns.  It could be that they have audited someone you did some form of business with and there is supporting documentation to indicate you received a sum or money.

Your first recourse is to file your taxes pertaining to this matter immediately so the CRA can do a re-assessment based on the information you provide them with. You may want to utilize professional help in doing this. Your tax return will be scrutinized and you want to ensure that it is done perfectly correct and that you have all of the documentation to support your filing.

Many times people don’t file their taxes because they know they owe money and simply don’t have it to pay the tax debt. They aren’t sure how to handle the situation and are nervous about dealing with the CRA.

It used to be tough dealing with this level of the Government but over the years they have taken on a more professional approach when dealing with the tax payer who truly recognizes their tax obligation but is having financial difficulty. There are methods in place now to help with payment arrangement plans. There is also the tax payers relief program that might be able to assist with the burden of the penalties and interest.

If you are behind in your taxes or have received an arbitrary assessment, then first make up your mind to have a properly completed tax return done by a quality accountant. Accept the fact that if you have a tax debt it must be paid, but let your accountant help you work with the tax department to bring this issue to a successful conclusion.

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

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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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