Understanding Your CRA Notice of Assessment

Receiving a notice of assessment from the Canada Revenue Agency (CRA) can be an anxiety-inducing moment, especially if it states that you owe tax you believe you’ve already paid. However, before succumbing to panic, it’s crucial to understand the nuances of the assessment process and how to effectively navigate discrepancies.

Is it current?

The first thing to recognize is that paper notices of assessment are static documents. Unlike magical paintings in the Harry Potter universe, they don’t adapt to real-time changes. They are generated days before reaching your mailbox, rendering them instantly outdated upon arrival. Therefore, discrepancies between what your notice says and your actual financial status are not uncommon.

What do the RRSP figures on my Notice of Assessment Mean?

Start with My Account

The key to resolving such discrepancies lies in accessing up-to-date information through the CRA’s online portal, My Account. By logging in, you gain insight into your current tax status, including any outstanding balances. Remember, what’s reflected in My Account supersedes the information on your paper notice.

If My Account indicates a zero balance despite your paper notice claiming otherwise, rest assured that the digital record is accurate. However, if you still owe money according to My Account, it’s time for a deeper investigation.

Navigate to your account statement within My Account to review recent transactions. Here, you’ll find a comprehensive record of payments and assessments. Pay attention to the date and amount of your most recent payment. While the application date by the CRA may differ from your actual payment date, focus on identifying the correct amount credited to your account.

If you locate the payment in question, it confirms that the CRA has received and acknowledged it.

Inside CRA: Statement of Account

Payments made to the wrong account

However, if the payment is absent, consider the possibility of misdirected funds. Common errors include remitting payments to the wrong account, such as another individual’s tax account or to your GST/HST account if you’re self-employed.

Should you identify a misdirected payment, contact the CRA promptly to rectify the issue. They can assist in reallocating the funds to the appropriate account.

Payments diverted to prior amounts owing

Alternatively, if the payment was correctly applied but didn’t fully offset your outstanding balance, it likely contributed to prior tax obligations or was absorbed by existing debts.

Get some assistance

In cases where clarity remains elusive, don’t hesitate to reach out to the CRA directly. Their dedicated agents possess the expertise to dissect account discrepancies, and they’re generally friendly and helpful.

If calling the Canada Revenue Agency (CRA) is too stressful you can choose to consult with a personal tax advisor for additional insights and guidance.

Why Do I Owe Income Tax?

Summary – what to do with a perplexing tax bill

1. **Investigate**: Scrutinize the accuracy and currency of your notice of assessment.
2. **Inquire**: Seek clarification from the CRA through My Account or direct communication.
3. **Consult**: Get help from CRA or your tax advisor to help unravel the situation and help you find solutions

Personal Tax Advisors is always here for you to help you navigate any issue with your taxes and to speak on your behalf with the Canada Revenue Agency (CRA). Contact us today to find out how we can help.