How Far Back Can the CRA Reassess?
We have the answer to the question of how far back in time the Canada Revenue Agency ("CRA") can reassess your tax return. If you have any concerns or want to file an objection to your CRA Notice of Reassessment, please get in touch with us today.
Knowing how the Canada Revenue Agency (CRA) and the Canadian tax system function is helpful for comprehending the reassessment procedure. It's important to distinguish between an assessment and a reassessment as a first step.
In what ways are taxes evaluated?
According to the CRA, a tax is meant to "promote awareness of and compliance with the laws it administers."
What this means is that the CRA will review your return, verify the data you submitted, and ask for clarification if necessary. You will receive a Notice of Assessment (NOA) from the CRA after your tax return has been initially assessed. The amount of tax you owe (or expect to receive as a refund) and other relevant details of your tax situation will be included here. The CRA can reevaluate your return at a later date if they so choose, but they cannot change the initial assessment.
Typically, tax returns are processed by the CRA within two to six weeks after submission. Before you receive your Notice of Assessment, there may be an opportunity for a pre-assessment review. The government organization will look over your claimed exemptions and reductions and may contact you for more details. Your tax return may be subject to a processing review after the NOA has been issued.
Exactly what is a Reassessment with the CRA
Your taxes may be reassessed by the CRA after you've filed and they've been initially calculated. The Canada Revenue Agency (CRA) will get in touch with you if they decide to review your tax return. There are a number of possible reasons why your return was chosen for review.
As a part of the CRA's matching program, a new assessment of your return is possible. In this case, the agency will compare the data you provided on your return to data it collects from other sources. Your reported income may be compared to the amount reported by your employer on their tax return. This evaluation typically takes place after NOAs have been issued later in the year.
In the event of a reassessment, a CRA auditor will review the amounts you reported and may ask for additional paperwork.
- 1| Providing a comprehensive service geared toward resolving your tax dispute in your favor;
- 2| Liaising with the CRA and guiding you through their dispute resolution process; and
- 3| Including former Canada Revenue Agency employees in their network of tax attorneys, Farber Tax Law offers a one-stop shop for all of your tax needs.
We often get asked, "How far back can the CRA reassess me?" in reference to CRA reassessments. Those who file their taxes early often worry that the Canada Revenue Agency (CRA) will audit them years later, forcing them to dig up old receipts and try to remember how much money they made ten years ago. In many cases, when the CRA issues a reassessment, the taxpayer is confronted with a mountain of back taxes that they have no idea how to resolve.
Fortunately, the Canada Revenue Agency can only reassess a taxpayer's returns for a certain number of years into the past. Generally, you have three years from the date your tax return was initially assessed before the Canada Revenue Agency can reassess it. If, for 2014, you file your tax returns on April 30, 2015, you will (i) e timely), on June 1, 2015, the CRA is expected to release the first NOA. Revaluation would continue until June 1, 2018. A longer, four-year reassessment limitation period may apply to certain parties such as mutual fund trusts and certain types of corporations.
Prolonging the Timeframe for Reassessment by the CRA
The CRA has the authority to extend the reassessment window under certain circumstances. The Canada Revenue Agency (CRA) can reassess past the typical three-year window if it has reason to believe the taxpayer knowingly or recklessly underreported income or otherwise misrepresented material facts on a prior tax return. Similarly, if the CRA has reason to suspect fraud,
The CRA must establish that fraud, neglect, or willful fault occurred in order to reassess the return. To make a simple and honest mistake on your return under these conditions does not constitute a violation of these terms. Insinuating a deeper significance, The Canada Revenue Agency (CRA) may request that the reassessment time limit be extended if it finds that a significant error was made, such as omitting income.
However, if you sign a waiver allowing the CRA to reassess your case after the three-year period has passed, they can do so even if you have not filed a tax return.
Storage of Tax and Banking Records
Reassessment time limits are not the same as record keeping requirements. Tax records should be kept for six years, as recommended by the Canada Revenue Agency (CRA) in case further examination is required. In the event that you are late in filing your return, you should keep all related records for a period of six years beginning on the date you actually filed.
Being in possession of your necessary paperwork is essential. It's easy to see how challenging it would be to go through a Canada Revenue Agency audit without any supporting documentation. The government organization will ask for concrete evidence of your tax and financial status. If you don't have the paperwork the CRA needs, they may delay your refund or outright deny your claim.
A consultation with one of our tax experts is essential if the CRA has contacted you about an audit. We will not only act as your intermediary with the CRA but also assist you in getting ready for the audit. We'll take a look at your situation and let you know what paperwork you'll need to submit to the CRA based on our findings. You can then go ahead and find them in preparation for the CRA's questions.
Please contact us today if you have any questions about the reassessment process or if you are currently being reassessed or audited by the Canada Revenue Agency (CRA).
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