07 May 2013

It’s a letter from the Canada Revenue Agency.

Don’t panic. It’s probably your Notice of Assessment.

Once you’ve filed your T-1 tax return, the CRA reviews your files and sends you a statement. It’s a two-page document that shows your personal information and a summary of your income, deductions, credits and taxes previously paid.

It also declares how you much owe in taxes (if any), how much tax you’ve already paid, any tax credits received and how much you can contribute to your RRSP in the next year.

The CRA has, at this stage, only checked to make sure your math is right. If it wasn’t — and that’s pretty rare these days with the proliferation of tax-return software — the CRA will make an adjustment to your return or balance owing.

So, your assessment notice may come with a bigger cheque than you expected (or direct deposit, if that’s what you’re using) or a request for additional funds.

Or, they’ll let you know that everything is ticketyboo and your account is paid in full with no balance owing. That doesn’t mean you’re out of the woods, however.

Take note

Your assessment notice will indicate the amount of any interest and penalties assessed on your taxes. You should check with the CRA if your balance owing or your refund is different from what you expected.

The government can and does make errors. You could save even more in taxes if the CRA computers threw a monkey wrench into your tax return.

Time to wait

The CRA may still request an audit of your tax return. The department has been taking some heat in the media lately.

According to a PostMedia story, the total of uncollected tax debt has soared about 60 per cent to $29 billion in the last seven years, at the same time the cost of “doubtful accounts” unlikely to be collected has more than doubled to almost $12 billion.

What does that mean to you? Many feel the CRA isn’t doing enough to crack down on tax evaders and collect what it’s owed. More average Canadians may face audits if they haven’t been careful in doing their taxes.

An audit allows the CRA to monitor and inspect your income tax return. If you are selected for an audit, the CRA will send you a letter with your auditor’s name and phone number.

Now, not to keep you guessing or anything, but let’s wait until Thursday to dive into the nitty-gritty of an audit.

Can you help?

We sure can. Contact one of our tax specialists and we can help you if you’re selected for an audit.

Fill out our contact form or give A1 Accounting a call at 403-226-8297.