After hours of gathering receipts, making calculations, going through checklists and stressing out about getting your taxes filed correctly and on time, you finally receive a response from the Canada Revenue Agency (CRA) on whether they agree with your calculations or whether you’re facing an unexpected tax bill. That response is the CRA’s Notice of Assessment (NOA).
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If you filed a paper return, it could take up to eight weeks to receive your NOA and around two weeks if you filed electronically.
Important Sections of A CRA Notice of Assessment
Aside from a CRA decision to audit you, the following sections of a CRA Notice of Assessment contain the most pertinent information regarding your return and tax obligations and comprise the bulk of a CRA NOA.
The outcome of your assessed or reassessment tax return is displayed in this section, which will likely either be a refund, a balance owing or a zero balance. This amount will include any unpaid amounts from prior returns.
If you file multiple returns at once (in other words, you file returns for previous years), assessments or reassessments for those concurrently filed late returns or subsequent assessments or reassessments will appear in the account summary of the NOA of the most recent tax year.
Tax Assessment Summary
The primary lines on your assessed tax return are listed in this section. You will see the sums the CRA used to determine your balance next to each line.
It’s crucial to compare these amounts to what you reported on your return to see if the CRA made any modifications to them and, therefore, changed the amount of your return or the taxes payable. See the “Disputing CRA Determinations on Your Notice of Assessment” section for what to do if you disagree with the CRA’s amounts on your NOA.
The total taxes payable, any penalties, interest or your refund amount are also displayed in this section, as well as any outstanding balances from prior assessments, if you have any.
Explanation of Changes and Other Important Information
If the CRA does make adjustments to amounts reported on your return, this is where they will explain their reasons for the changes. This section may also contain other information, such as your potential eligibility for future credits and their requirements.
RRSP Deduction Limit Statement
This section tells you the maximum amount of RRSP contributions you are permitted to deduct in the next tax year and explains how the CRA determined your RRSP deduction limit, which is done using data from both your prior tax return and data they already have on file.
This data is used to calculate your available RRSP contribution room. The CRA calculates this amount by subtracting any previously unused RRSP contributions from previous returns. You have available RRSP contribution room if the amount of your claimed RRSP contributions (current contributions plus previously unused contributions) is lower than your deduction limit.
Keep in mind if you exceed your RRSP deduction limit, you may have to pay taxes on the excess contributions. Visit this CRA page to learn more about how RRSP contributions affect your deduction limit.
Home Buyer’s Plan Statement
The Home Buyer’s Plan (HBP) allows Canadian taxpayers to withdraw funds from their RRSP accounts to use towards the purchase of eligible homes and pay back those amounts within a specific timeframe without having to pay tax on the withdrawn amounts.
If you take advantage of the HBP, your Notice of Assessment will contain a section that outlines your remaining balance, as well as the minimum payment you must make in the next tax year. If you pay less than the minimum amount, you must report the difference as RRSP income on your return in that year.
Lifelong Learning Plan Statement
Similar to the HBP, the Lifelong Learning Plan (LLP) allows taxpayers to withdraw a capped amount during a calendar year from their RRSPs to pay for eligible training or education that you, your spouse, or your common-law partner pursue full-time.
If you participate in the LLP, your NOA will include a statement showing your remaining balance and minimum repayment amount for the coming tax year. Paying less than the minimum will require you to report the difference as income from your RRSP in that tax year.
Disputing CRA Determinations on Your Notice of Assessment
Similar to challenging a CRA audit assessment, you can also dispute an assessment or reassessment. You also have the option to add new or additional information that changes your return.
If, for example, when reviewing your tax return, the CRA does not accept credits you have claimed or the dollar amounts for those credits and adjusts those amounts, which causes you to be assessed at a higher tax amount payable, you can object to the assessment. You must do so within 90 days of receiving your NOA.
Haven’t Filed A Tax Return? You Can Still be Assessed by the CRA
You can still get a Notice of Assessment even if you haven’t submitted a return if the CRA decides to arbitrarily create a return for you and input information they believe to be accurate on your behalf.
When the CRA does not receive a tax return from a taxpayer, they may make an arbitrary assessment by estimating the taxpayer’s income and other amounts based on prior filings. The agency will subsequently send the taxpayer an NOA informing them of its assessment of their tax situation.
In these situations, it’s not uncommon that the amounts used by the CRA are not in the taxpayer’s favour or that credits the taxpayer would have used are not included in their assessment. If this happens to you, or your NOA indicates that you are being selected for an audit, or you wish to object to your NOA, always find tax help experts who can represent you and help you navigate the bureaucracy of a dispute with the CRA.