Even the feds can make mistakes on returns

But don’t ignore notice from CRA

Q: Last week, I received a Notice Of Assessment for my 2006 income tax return from the Canada Revenue Agency (CRA). Each year, I have used a tax preparer to file my income taxes. I expected a large tax refund but instead my assessment states I owe several thousand dollars. I cannot afford to pay this amount. Do I have any alternatives?

— Danny, Toronto

A: With the April 30 tax deadline behind us, many taxpayers assume that’s it for taxes until next year. For many, that is true. Most individual tax filers receive a Notice Of Assessment from CRA within a few weeks, and it generally agrees with the taxpayer’s return. Think about it: who wants to continue sitting over lunch discussing tax credits, deductions, capital losses, non-capital losses, carry-backs, eligible dividends, due diligence, ABILs, RRSPs, RRIFs … well, accountants do this every day. We’re an exciting breed!

An initial Notice Of Assessment mailed to you within a few weeks of filing does not bind CRA. This notice generally indicates there were no initial errors discovered or information required. Several months after the tax-filing deadline, CRA does a more detailed review and may discover errors or misstatements. A Notice Of Re-Assessment is sent to the taxpayer, who may accept the CRA findings or may file a Notice Of Objection. Remember, CRA also makes errors. Carefully review the explanation on the notice. If you agree with CRA, pay the entire taxes owing to avoid any further interest penalties. Failing this, call and make necessary payment arrangements. Do not ignore the notice, as CRA will initiate collection after 90 days after the date of the notice. At times, CRA can be mistaken for the RCMP: “they always get their man/woman.”

If you disagree with CRA’s notice, file a notice of objection within the required 90 days (one year for certain issues) from the date of the notice. Disputes should be brought to the attention of your tax preparer but there may be instances that you will require the expertise of an experienced professional, particularly with a larger and more complex filing.

A request can generally be managed by providing specific receipts or completing a questionnaire. Take a page from yoga: Stop. Take several deep breaths. Relax. Clear the mind. The envelope please.

Henry Choo Chong, CGA provides accounting and tax services to individuals and businesses in the GTA. He can be reached at 416-590-1728, ext. 304. Any questions to Money Matters should be e-mailed to choochonghcga@yahoo.ca