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 income amounts that were 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.
The CRA’s review process of income tax returns, no matter the filing process, is to do an initial review based on the information provided by the taxpayer and to issue a Notice of Assessment to that taxpayer. In some cases, the Agency will make changes or corrections of an arithmetical nature — the CRA does not alter a return to add credits or deductions not already claimed by the taxpayer. In other instances the return is “assessed as filed” — that is, the CRA agrees with the information filed by the taxpayer, and no changes to the return are needed. In either case, unless the taxpayer disagrees with and wishes to dispute the Notice of Assessment issued by the CRA, his or her tax filing obligations for the year are complete.
That process of initial review by the CRA, followed by the issuance of a Notice of Assessment can, however, be “short-circuited” in a couple of ways. First, the taxpayer sometimes realizes that their filed return contains an error. Second, the CRA can determine that its initial review of the return cannot be completed until it obtains more information or documentation from the taxpayer.
In most cases, it’s the taxpayer who discovers, after the return is filed, that information has been inadvertently misstated, or perhaps amounts have been omitted where an information slip was received after the return was filed. In such situations, the taxpayer is often at a loss on how to proceed. The first reaction in such circumstances is sometimes simply to file another, corrected return, but that’s not the right course of action. Instead, the taxpayer should wait until a Notice of Assessment is received in respect of the return already filed, and then file a T1 Adjustment Request with the CRA, making the necessary corrections. That request for an adjustment to an already-filed return can be done in any one of three ways, once the Notice of Assessment is received. The available methods are outlined on the CRA website, as follows:
The easiest and quickest way of requesting an adjustment is through the CRA website’s “My Account” feature, but that option is available only to taxpayers who have already registered for that service. While doing so isn’t difficult , it does take a few weeks to complete the process while you what for your CRA security code to arrive in the mail. For further information about registering for a CRA "My Account" user ID and password, visit www.cra-arc.gc.ca/esrvc-srvce/tx/psssrvcs/pss_fq/cnd-eng.html#hlp1a.
Taxpayers who don’t want to deal with the CRA through its website, or who don’t think it’s worth registering for "My Account" just to deal with the Agency on a single issue, can obtain a hard copy of the T1 Adjustment form from the CRA website. The most recent (2015) version of the form can be found at www.cra-arc.gc.ca/E/pbg/tf/t1-adj/README.html. Taxpayers who are unable to print the form off from the website can order a copy to be sent to them by calling the CRA’s individual income tax enquiries line at 1-800-959-8281.
The use of the actual form isn’t mandatory — the third option of sending a letter to the CRA signed by the taxpayer is an acceptable alternative — but using a standardized form has two benefits: (1) it makes it clear to the CRA that an adjustment is being requested, and (2) filling out the form will ensure that the CRA is provided with all the information needed to process the requested adjustment.
Once the form or letter is completed, it (along with any supporting documents) should be mailed to the Tax Centre to which the original return was sent. A taxpayer who isn’t sure where that was can go on the CRA website at www.cra-arc.gc.ca/cntct/tso-bsf-eng.html and, by selecting his or her location from a drop-down menu of provinces and cities, can obtain the address of the Tax Centre to which the adjustment request should be sent.
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 respond to such requests promptly, and to provide the requested documents or information. The CRA can assess only on the basis of the 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 usually resolve the question to the CRA’s satisfaction, and the assessment of the taxpayer’s return can then proceed.