Top 5 Reasons for Receiving a CRA Tax Reassessment
Receiving a CRA tax reassessment can be stressful, but it is important to understand why it happened and what steps you can take to resolve it.
When the Canada Revenue Agency (CRA) sends you a notice of reassessment, it means they reviewed your tax return and determined that adjustments are needed. This can happen for several reasons, and it is essential to know what triggers a reassessment so you can avoid issues in the future.
Why Would You Get A Notice of Reassessment
Here are the top reasons why the CRA might reassess your tax return:
1. Errors in Reporting Income
One of the most common reasons for a CRA audit or tax reassessment is simple mistakes in reporting income. If you forget to include earnings from a side job or investment income, the CRA will notice the discrepancy.
2. Incorrect or Overlooked Deductions
Claiming deductions can save you money, but claiming the wrong ones can raise red flags. For example, if you claim a home office deduction but do not meet the criteria, you could end up with a notice of tax reassessment. On the other hand, if you forget to claim legitimate deductions, you might miss out on tax savings! It is a delicate balance!
3. Missing or Incomplete Information
Sometimes the CRA needs more information to verify your return. This could be because of missing receipts for expenses or discrepancies between your reported income and what your employer or financial institutions have provided. When the CRA notices inconsistencies, they may initiate a tax reassessment.
4. Misreported Investment Gains
If you have sold investments or received income from stocks or mutual funds, it’s important to report any capital gains or losses accurately. Failure to do so is a common reason for a tax reassessment.
5. Selection for a CRA Audit
Even if you file your taxes correctly, your return may be randomly selected for a CRA audit. Audits can uncover errors or overlooked details, leading to a reassessment after the audit concludes.
You Can Disagree With Your Notice of Reassessment. What to Do Then?
If you receive a notice of reassessment, the first step is to review it carefully. If you agree with the CRA’s findings, you can make the necessary payments. However, if you disagree, you have the option to file a tax appeal, and we are here to help!
At Taxpayer Law, our team of experienced tax lawyers is here to help you navigate the reassessment process. We can assist with gathering documents, reviewing your case, and representing you during any tax dispute appeals process.
When you are facing a CRA audit or tax reassessment, contact us today to chat with a tax lawyer about your situation.