How to Respond to a CRA Notice of Reassessment

Identify exactly what changed

Compare the original notice of assessment, filed return and reassessment line by line. Record the tax, interest, penalties, credits and carryforward balances that changed. Obtain the auditor or reviewer explanation if it is not clear.

A disagreement needs evidence and a legal position

Saying that the reassessment is unfair is not enough. Identify the factual disagreement, documents and tax rule. A schedule should reconcile the amount claimed to invoices, contracts, bank records or calculations.

Informal discussion versus formal objection

A call or adjustment request may resolve a simple processing issue, but it does not necessarily extend the objection deadline. Protect the formal deadline while discussions continue. The objection should identify the issues, facts, reasons and requested changes.

Example

CRA denies $25,000 of subcontractor costs because invoices were not supplied during a review. The taxpayer later locates invoices, payment confirmations and project records.

The response should reconcile the $25,000, explain each contractor's work and address any concerns about business purpose or payee identity. The taxpayer should not simply resend a general ledger without source documents.

Payment and interest

A disputed assessment may continue to accrue interest. Collection restrictions differ by tax type and stage of dispute. Consider paying all or part of the amount to stop additional interest where cash permits, without treating payment as acceptance of the assessment.

Maintain a chronology

Keep dates of calls, names or identifiers of CRA officers, documents sent, confirmations and decisions. A clean chronology is valuable if the matter proceeds to Appeals or court.