What Happens After You File That Tax Return

By now, most Canadian taxpayers (excepting the self-employed and their spouses, who have until June 15) will have filed their 2007 income tax returns. Once the Canada Revenue Agency has processed those millions of returns, over the next few weeks and months, taxpayers across Canada will begin to receive Notices of Assessment for 2007. In most cases, the Notice of Assessment issued will simply confirm the information that the taxpayer provided on the return, perhaps with some minor arithmetical corrections. However, not infrequently, the Notice of Assessment will indicate that the CRA has disallowed or changed the amount of certain deductions or credits, or has included in income amounts not declared by the taxpayer on his or her return. When that happens, it’s time for the taxpayer to decide whether to dispute the CRA’s assessment of their tax situation.

Sometimes, the CRA will contact the taxpayer even before the return is assessed, to request further information or documentation of deductions or credits claimed (for example, information on the custody of a child where one parent has claimed an equivalent-to-spouse deduction, or receipts documenting child care expenses claimed). In all cases, the best thing to do is to respond to such requests promptly and to provide the requested documents or information. The CRA can assess only on the basis of information with which it is provided, and where a request for information or supporting documents for a deduction or credit claimed is ignored by the taxpayer, the assessment will proceed on the basis that such support does not exist. Providing the requested information or supporting documents can often resolve the question to the CRA’s satisfaction, and the assessment of the taxpayer’s return can then proceed.

If the CRA has issued an actual Notice of Assessment, and it indicates that the CRA’s assessment differs from the information provided by the taxpayer on the return, the first thing to consider is why the CRA does not agree with the return as filed. In some cases, it’s very simple — for instance, if the CRA has included in income an amount received by the taxpayer but not reported, perhaps because the related information slip was mislaid or never received. In such cases, disputing the Notice of Assessment really doesn’t make sense. Although it’s common for taxpayers to think that if they didn’t receive an information slip, they don’t have to report the income, that’s not the case. Each taxpayer is responsible for keeping track of and reporting his or her own income, regardless of any administrative errors that may result in the taxpayer not receiving an information slip.

If the source of the disagreement is not so straightforward, the next step is for the taxpayer to contact the CRA to indicate that they disagree with the assessment and to provide the reasons for their disagreement. Taxpayers can visit their local Tax Services Office (TSO) (a listing of such offices is available on the CRA Web site at http://www.cra-arc.gc.ca/contact/tso-e.html) to meet with a CRA representative. The CRA no longer provides “walk-in” service at its TSOs, and so it’s necessary to call ahead to make an appointment and to bring a copy of the return filed and the Notice of Assessment to the meeting. Taxpayers can also write to the CRA to dispute the Notice of Assessment, but any such letters should be sent not to the local Tax Services Office, but to the Tax Centre at which the return was originally filed. In many cases, a face-to-face meeting with a CRA representative can move things along more quickly than a letter to the Tax Centre.

If the situation still isn’t resolved through a meeting, it’s time for the taxpayer to consider filing an Objection. Filing such an Objection formally advises the CRA that the taxpayer is disputing his or her tax liability for the taxation year in question. Not incidentally, the filing of an Objection also brings to a halt any efforts