If you’re a business owner in Alberta and have received a CRA reassessment letter, don’t ignore it. A reassessment means the Canada Revenue Agency (CRA) has reviewed your tax return and made adjustments—sometimes in your favor, sometimes not. Whether it results in more taxes owed, a reduced refund, or corrections to deductions, knowing how to respond is crucial.
Here are six smart moves to handle a CRA reassessment letter the right way.
1. Read the Letter Carefully—What’s Changing?
The first step is to understand exactly what the CRA has adjusted in your return. A reassessment could mean:
- Additional taxes owed
- A reduced refund
- Adjustments to deductions, credits, or income reporting
What to Do:
- Compare the reassessment details with your original tax return.
- Look for explanations about why changes were made.
- Note any deadlines for responding if you disagree with the assessment.
2. Check for Errors—Did the CRA Make a Mistake?
Even the CRA isn’t perfect. Errors can happen due to misinterpretation of tax documents, incorrect application of tax laws, or missing information.
What to Do:
- Review your tax documents and cross-check the CRA’s calculations.
- Look for missing deductions, incorrect income adjustments, or misapplied tax credits.
- Consult your accountant or tax professional if anything seems incorrect.
3. Decide If You Accept or Dispute the Reassessment
Once you’ve reviewed the details, you have two choices:
- Accept the CRA’s changes – If everything checks out, you can proceed with any necessary payments or adjustments.
- Dispute the reassessment – If you believe there’s an error, you have the right to challenge it.
What to Do:
- If you accept the reassessment, follow the payment instructions and update your records.
- If you disagree, move quickly—there’s a strict 90-day deadline to file an objection.
4. File a Formal Objection If Needed
If you believe the CRA’s reassessment is incorrect, you can file a Notice of Objection to dispute the changes. This initiates a review by the CRA’s appeals division.
What to Do:
- File your Notice of Objection using Form T400A within 90 days of receiving the reassessment.
- Provide clear explanations and supporting documents to strengthen your case.
- Work with a tax professional to ensure your objection is properly prepared.
5. Arrange Payment (Even If You Dispute It)
If the reassessment results in additional taxes owed, the CRA expects payment by the due date—even if you’ve filed an objection. Interest and penalties can still accumulate during the review process.
What to Do:
- Pay the reassessed amount in full if possible to avoid interest charges.
- If you can’t pay immediately, contact the CRA to discuss a payment arrangement.
- Keep track of deadlines to prevent further penalties.
6. Improve Your Tax Filing Process for the Future
A CRA reassessment can be a wake-up call to improve your tax compliance and record-keeping. Reducing errors and keeping better records can help you avoid reassessments in the future.
What to Do:
- Keep detailed and organized tax records, including receipts, invoices, and payroll documents.
- Work with a professional accountant to ensure accurate filings.
- Review your tax returns carefully before submission to catch potential red flags.
Key Takeaways
- Read the reassessment letter carefully to understand what changed.
- Verify the CRA’s calculations to catch any potential errors.
- Decide whether to accept or dispute the reassessment based on your findings.
- File a Notice of Objection within 90 days if you disagree.
- Pay any taxes owed on time to avoid interest and penalties.
- Improve your record-keeping and tax filing process to prevent future issues.
Need help responding to a CRA reassessment letter? Contact us today—we can review your case and guide you through the next steps.
