Understanding CRA Notices and Letters: What to do if you get one

The Canada Revenue Agency (CRA) organized a focus group a few years ago to determine why some taxpayers do not open their CRA letters and notices. The number one reason is ‘avoidance of suspected stressful content’. No matter how uneasy (or uninterested) the delivery of that brown envelope with the little black flag in the corner makes you feel, ignoring it isn’t an option. And, certainly, the same holds true if it’s a CRA email.

While it’s natural to fear the worst (a tax bill! or an audit! ), there are a variety of reasons for the CRA to contact you, some of which may be beneficial to you.

Here are six possibilities:

1. Notice of Assessment

If the CRA comes in your email two to eight weeks after you’ve submitted your tax return, it’s most likely a Notice of Assessment (NOA). The NOA outlines your income as well as the tax credits and deductions you sought. Most importantly, it informs you whether you owe money or are due to a refund.

CRA My Account online mail

Do you want to avoid brown envelopes for the rest of your life? Register to receive email notifications. By signing up for CRA My Account online mail, you will receive emails from the CRA whenever an important update is made to your account or when you receive a new notice or letter. You’ll never have to rely on snail mail again. Just don’t disregard CRA emails!

2. Notice of Reassessment

If the CRA needs more information about what you stated on your tax return — or if they made a change to your return — you’ll receive a Notice of Reassessment. Except for the highlighted areas, this document looks almost identical to a NOA. It is important that you review this letter as quickly as possible so that if you owe money, you can repay it without paying extra interest or penalties. Not to mention, you have 90 days to respond if you believe the CRA has made a mistake.

3. Canada Child Benefit notice

If you have one or more children under the age of 18 and have applied for the Canada Child Benefit (CCB), the amount you will receive may be detailed in your CRA notice. If you received an overpayment on a previous installment, this notification will explain how the CRA intends to recover the money – most likely by deducting it from future CCB payments or your income tax refund.

4. GST/HST notice

The GST/HST credit is a quarterly tax-free payment that assists low and moderate-income Canadians in recovering a portion of the sales tax they paid on goods and services. If the CRA sends you a GST/HST credit notice, congratulations! – it means you’ll be getting a refund.

If you own a business, you should be on the lookout for a GST/HST notice. The CRA sends you this document after processing your tax return to let you know whether you have a refund, an amount owing, or neither.

5. Request for information

Don’t be alarmed if you receive a Request for Information from the CRA. It is most likely a routine check to ensure the information on your tax return is correct. This letter typically requests receipts or documents to support a claim or deduction you made on your tax return. That’s all! The sooner you provide the requested information, the sooner the process will be completed. Ignoring this letter, on the other hand, will raise a red flag and may cause problems where none previously existed.

6. Audit

If you receive the dreaded Audit Notice, take a deep breath. Allow yourself some time to process what it means to be audited. An audit is essentially a verification exercise in which the claims on your return(s) are cross-referenced with your records and receipts from the previous six years.

If you receive such a notice, the best thing you can do is respond promptly with the requested information while remaining respectful throughout the process. The CRA will send you a final letter outlining its findings at the end of the audit. If you disagree, you have 90 days to file an appeal. This is yet another reason why you should open this notification as soon as possible.

While you might not be as excited about a CRA-themed letter as you are about a package from your favorite online retailer, giving CRA notices the attention they deserve is always the right thing to do.