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Tax deadline and confusing tax correspondence

April 29, 2012

Major media outlets just released a somewhat shocking statistic that revealed that 45% of Canadian taxpayers expected to file personal tax returns still have not filed!
It is important to remember that all taxes due in respect of 2011 tax returns are due by the end of April 30th. Although self-employed taxpayers have an extended filing to June 15, even their taxes are fully due at April 30. Failure to pay the taxes on time will result in hefty penalties and interest. It is therefore imperative that all taxes are paid on time. For self-employed taxpayers who will not be filing until June 15th and who therefore do not know the precise amount of the taxes due, installments and estimated taxes should be remitted.
Once taxes are filed, the Canada Revenue Agency (CRA) will issue its first round of tax correspondence termed “notices of assessment” to all taxpayers. These notices set out whether all filed tax amounts have been accepted (in which case all amounts paid or received will be accepted) or whether there has been an error or need for further clarification or support for amounts. In the case of a clerical error, the tax amounts will be changed and CRA will provide the adjusted amount of tax due or receivable. In the case of a need for support, CRA will outline which items it does not yet agree with and it then becomes the burden of the taxpayer to provide specific supporting documentation to CRA within 30 days. Failure to respond to the request will result in an absolute denial of all amounts in question.
For some lucky taxpayers, a second round of correspondence termed “notices of reassessment” will be received. This round is essentially the same as the first round. It takes place because CRA does not have the resources to review all tax returns as they are filed and instead reviews some immediately and reviews others through the rest of the year. It is therefore common to receive notices of assessment in shortly after filing and notices of reassessment subsequently.
It is also worth noting that it is never to early to begin planning for the 2012 tax year, which is already 4 months old!
As always, questions and comments are welcome here or by email – danielydiamond@gmail.com

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From → Personal tax

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