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After all the blood, sweat and tears that went into filing your taxes, the journey isn’t over until you receive your Notice of Assessment from the CRA. In fact, if you receive notice that you are being selected for an audit on your NOA, you are far from being out of the woods.
Don’t take chances on filing an inaccurate return, missing out on credits that can reduce your tax obligations or proper tax planning strategies. Seek the advice of an experienced business accountant like Tangs Accounting. It’s an investment that pays back in multiples over time.
The following are the most important sections of a CRA Notice of Assessment.
Your Account Summary
This section displays the outcome of your assessed or reassessment tax return, which will most likely be a refund, an obligation owing, or a zero balance. This figure includes any unpaid payments from previous returns.
If you file multiple returns simultaneously (that is, returns for earlier years), assessments or reassessments for those concurrently filed late filings, as well as subsequent assessments or reassessments, will show in the account summary of the most recent NOA.
Tax Assessment Section
This section lists the main lines on your assessed tax return. Next to each line, you’ll see the sums used by the CRA to calculate your balance.
It’s critical to compare these figures to what you recorded on your return to discover if the CRA changed them and, as a result, changed the amount of your return or the taxes owed. If you disagree with the amounts on your NOA, you have 90 days to file an objection after receiving your NOA.
This area also displays the total taxes owed, any fines, interest, or return amount, as well as any outstanding balances from earlier assessments, if applicable.
Explanation of Changes and Other Important Information
This is where the CRA will give its justifications for any adjustments it makes to amounts reported on your return. Other information, such as your potential eligibility for upcoming credits and their prerequisites, may also be included in this section.
RRSP Deduction Limit Statement
This section describes how the CRA calculated your RRSP deduction limit, which was done using information from both your prior tax return and information they already have on file. It also gives you the maximum amount of RRSP contributions you are allowed to deduct in the upcoming tax year.
This information is used to calculate your RRSP contribution room. This amount is calculated by deducting any previously utilized RRSP contributions from previous returns. If the total of your claimed RRSP contributions (current contributions plus previously utilized contributions) is less than your deduction limit, you have available RRSP contribution room.
Keep in mind that you might have to pay taxes on the extra contributions if your RRSP deduction exceeds the allowed amount. Learn more about how RRSP contributions affect your deduction limit by visiting this CRA page.
Home Buyer’s Plan Statement
Under the Home Buyer’s Plan (HBP), Canadian taxpayers are able to take money out of their RRSP accounts tax-free to use toward the purchase of qualified properties and then repay the money within a set time period.
If you use the HBP, your Notice of Assessment will have a part that lists your outstanding debt and the minimum payment you need to make for the following tax year. If you pay less than the required minimum, you must declare the extra money on your tax return for that year as RRSP income.
Lifelong Learning Plan Statement
The Lifelong Learning Plan (LLP), which is similar to the HBP, permits you to withdraw a certain amount from your RRSPs throughout a calendar year in order to pay for certain training or education that you, your spouse, or your common-law partner undertake full-time.
Your NOA will include a statement detailing your remaining balance and the minimum repayment amount for the upcoming tax year if you take part in the LLP. If you pay less than the minimum, you must declare the excess as RRSP income for that tax year.