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CRA Audit vs Reassessment: Understanding the Crucial Differences
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CRA Audit vs Reassessment: Understanding the Crucial Differences
Receiving a letter from the Canada Revenue Agency can feel confusing. Understanding the difference between a CRA audit and a reassessment helps you know what is happening and what steps you can take next.
What Is a CRA Audit?
A CRA audit is a review of your tax return. The agency checks if the information you reported is correct and supported by proper documents. Most audits are done by mail or through your CRA online account. In some cases, a CRA officer may visit your business or accountant’s office. During an audit, you will usually receive requests for receipts, bank statements, or other records.
What Is a Reassessment?
A reassessment occurs when the CRA changes your tax return after it has already been assessed. The CRA sends a formal document called a Notice of Reassessment. This notice explains the changes and shows any new amount you may owe (or, in some cases, a refund).
A reassessment can follow an audit, but it can also happen without a full audit. The CRA sometimes makes changes based on information from other sources, such as T4 slips or reviews of certain claims.
Key Differences at a Glance
- Purpose: An audit is a check of your return. A reassessment is the official change to your tax calculation.
- How it starts: An audit usually begins with a request for information. A reassessment is the result when the CRA decides adjustments are needed.
- What you receive: In an audit, you get letters asking for documents. With a reassessment, you receive a Notice of Reassessment.
What to Do If You Receive a Notice of Reassessment
Read the notice carefully and note the date it was issued. You have the right to disagree with the changes.
For most individuals and graduated rate estates, you must file a notice of objection within the later of 90 days from the date of the notice or one year after the usual filing due date for that tax year (pursuant to subsection 165(1) of the Income Tax Act).
If you miss this deadline, it may still be possible to ask for more time in some situations, but acting quickly is important.
Your Rights
You have the right to fair treatment when dealing with the CRA. This includes the right to a formal review of the reassessment and access to the documents the CRA used to make its decision.
How Pax Law Can Help
Navigating an audit or a reassessment can be complex. Many people are unsure how to respond effectively or prepare a strong objection.
At Pax Law, we help clients at every stage of the process. We review CRA notices, prepare clear and strategic objections, negotiate with the CRA’s Appeals team, and represent clients in the Tax Court of Canada when needed. Our goal is to protect your rights and achieve the best possible outcome.
Next Step
If you have received a notice from the CRA or would like clear guidance on your specific situation, contact Pax Law today for a confidential consultation. We can explain your options and help you take the right steps forward.
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