Understanding CRA Letters and Notices

Most CRA letters to individuals fall into one of a few categories. Knowing which one you received tells you how to handle it.

After you file your personal tax return (T1), the CRA issues a Notice of Assessment summarizing your taxable income, taxes owing or refund, RRSP and TFSA contribution room, and carryforward balances.

Your NOA is one of the most important tax documents you will ever receive. Keep it. Mortgage applications, loan approvals, and benefit eligibility all reference it.

A Notice of Reassessment means the CRA changed something on a return you already filed. This can happen because you requested a change, the CRA adjusted your return after a review, or third-party information (T4 slips, investment statements) was matched to your file.

A reassessment is not necessarily a problem. But if it results in a balance owing, interest starts accruing from the original filing deadline — not from the reassessment date.

The CRA regularly selects returns for review before fully accepting them. They will ask you to provide supporting documents for specific claims — employment expenses, medical expenses, charitable donations, tuition credits, childcare expenses, moving expenses, or home office deductions.

These reviews are routine. A review is not an audit. Respond with the requested documents within the deadline — usually 30 days — and the file typically closes without further action.

The CRA administers several federal and provincial benefits — GST/HST Credit, Canada Child Benefit (CCB), Canada Carbon Rebate, Canada Workers Benefit, Disability Tax Credit — and sends periodic letters confirming eligibility, payment amounts, or requesting updated information.

If your income or family situation changed last year, check that the CRA has your correct information. Missing updates can delay or reduce benefits.

The CRA may notify you of unpaid taxes, interest charged, or instalment payment requirements (common if you owe more than $3,000 in two consecutive years). Responding early prevents interest and penalties from compounding.

If you own a business in BC, you may also receive corporate-level correspondence. These look different from personal notices and carry different deadlines.

After filing a T2 corporate return, the CRA issues a Notice of Assessment confirming taxable income, taxes payable, instalment requirements, and loss carryforwards.

The CRA also routinely reviews corporate returns before final assessment — common areas include meals and entertainment, vehicle expenses, professional fees, capital asset purchases, shareholder transactions, and home office allocations.

Most reviews resolve with straightforward documentation. If you maintain organized records, you can respond in a day instead of scrambling for receipts from 18 months ago.

You will typically need invoices, proof of payment, and accounting records. The CRA generally limits ITC claims to four years back — but if you file late, that window shrinks.

If taxes remain unpaid, the CRA escalates from reminder letters to formal collection notices, which can lead to bank account garnishment, asset liens, and credit bureau reporting.

Responding — even to arrange a payment plan — stops escalation. The CRA will work with you on instalment arrangements if you reach out before they take enforcement action.

Don’t panic — and don’t ignore it. Most CRA letters are informational or request supporting documents. Responding accurately and within the deadline usually closes the matter.

Where people get into trouble is not the original letter — it’s the follow-up they did not send.