Many Canadians believe that the moment they file their tax return is the moment they allow themselves to stop thinking about taxes for another year. In fact, a tax return, once filed, can be assessed a number of times by either the Canada Revenue Agency (CRA) or Revenu Québec to make sure the information contained within is accurate.
Did you know? There are several reasons why your return might be selected for a detailed review or audit. Factors like your refund amount, the credits you’ve claimed, or if you’ve missed the tax filing deadline on more than one occasion can all cause your return to be flagged for a closer look. Returns can also be selected for review at random so remember – just because the CRA has chosen to review your return, doesn’t necessarily mean you claimed something you shouldn’t have.
What is a pre-assessment?
The first step in the review process is called a pre-assessment. During this time, your return might be flagged by the CRA or Revenu Québec based on certain deductions or credits you’re claiming. Generally, this isn’t a cause for alarm; if either agency contacts you during this assessment period, you’ll likely only be asked to provide additional documentation (like receipts or a doctor’s note) to support your claim(s).
What is a notice of assessment?
Once the CRA (or Revenu Québec) has finished reviewing your return, you’ll receive a notice of assessment (NOA). Your NOA provides a summary of the income you earned during the year, the credits and deductions you claimed, and most importantly, it will indicate how much additional tax you have to pay (if any), or your refund amount. Your federal NOA will also include the following information:
- Any carry forward amounts of credits to be claimed in a future year
- Your RRSP/PRPP deduction limit statement
- Any non-capital losses or net capital losses carry forward amounts
- Your Home Buyers’ Plan statement (if applicable) and
- Your Lifelong Learning Plan statement (if applicable)
What is a notice of re-assessment?
Even after your return has been processed, it can still be audited or adjusted through a program called the Benefit Client Adjustment Initiative. In simple terms, the CRA looks for under-claimed credits, examines your Canada Pension Plan contributions, and corrects your RRSP deduction limit, among other things. If applicable, your tax return will be adjusted and a notice of re-assessment, detailing the changes, will be sent to you.
Note: You might also receive a notice of re-assessment if you’ve forgotten to report a portion of your income on your return.