Notice of Assessment vs Notice of Reassessment: Understanding Key CRA Notices – A Complete Guide by a Montreal CPA Firm Near You

Introduction

Every Canadian taxpayer receives a Notice of Assessment (NOA) after filing their taxes. But fewer fully understand the difference between an Assessment and a Reassessment—and misunderstanding this difference can lead to missed deadlines, costly penalties, and lost dispute rights. Whether you are an employee, self-employed, a landlord, an investor, or a business owner, it is critical to understand what each notice means, what CRA is telling you, and what actions you must take. This guide explains the difference between a Notice of Assessment and a Notice of Reassessment, why CRA issues them, and how to respond strategically.

Legal and Regulatory Framework

The Notice of Assessment and Notice of Reassessment are governed by the Income Tax Act and Tax Administration Act (Quebec). CRA is required to issue a Notice of Assessment after reviewing your return. CRA may later issue a Notice of Reassessment if it discovers missing income, incorrect deductions, misreported credits, or new information. Taxpayers have 90 days from the date on a Notice of Reassessment to file a Notice of Objection. CRA can reassess returns within the normal reassessment period (three years for individuals and CCPCs) or beyond that period if they allege misrepresentation or gross negligence.

Key Court Decisions

In Canada Trustco v. Canada, the Supreme Court emphasized that CRA must follow legislated procedures when reassessing taxpayers. In Brooks v. Canada, CRA’s ability to reassess based on third-party information was upheld, reinforcing the importance of accurate filings. In LeBlanc v. Canada, a reassessment was overturned because CRA incorrectly interpreted evidence. These decisions underscore the need to read CRA notices carefully and respond appropriately.

What Is a Notice of Assessment?

A Notice of Assessment is issued after CRA processes your tax return. It confirms: your reported income, approved deductions, tax payable or refund, RRSP/TFSA limits, carryforward amounts, benefit eligibility, and whether CRA accepted or adjusted your return. An NOA is essentially CRA’s confirmation of your tax return for the year. It triggers the beginning of the objection deadline if CRA makes adjustments.

What Is a Notice of Reassessment?

A Notice of Reassessment replaces your original assessment with new tax calculations. CRA issues a reassessment if: they receive additional tax slips, audit results uncover issues, matching program detects discrepancies, late-filed slips are processed, your employer corrects a T4, rental or business expenses are questioned, GST/HST filings are adjusted, or new information (such as cryptocurrency transactions or real estate data) becomes available. A reassessment typically increases your taxes owing, reduces your refund, or denies credits.

Why CRA Issues Reassessments

CRA may reassess your return due to: unreported income, incorrect deductions, duplicate claims, medical expenses without receipts, unreported foreign income, unreported rental income, incorrect capital gains calculations, GST/HST discrepancies, shareholder loan issues, payroll audit findings, or information matching from banks, employers, gig platforms, or foreign institutions under CRS/FATCA agreements.

Key Differences Between Assessment and Reassessment

1. Purpose

Assessment: Initial processing
Reassessment: Correction or revision of prior assessment

2. Impact

Assessment: Usually neutral
Reassessment: Often financially negative

3. Deadlines

Assessment: Objection deadline begins if adjustments made
Reassessment: Fresh 90-day objection deadline

4. Review

Assessment: Standard processing
Reassessment: Often triggered by audit or matching

What to Do After Receiving a Notice of Assessment

Check if CRA made any adjustments. Compare NOA to your filed return. Confirm your: RRSP limits, TFSA limits, tuition credits, carryforwards, and CCB/GST credit eligibility. If CRA changed your return and you disagree, file a Notice of Objection within 90 days.

What to Do After Receiving a Notice of Reassessment

1. Read the Explanation Carefully

CRA will outline adjustments in the “Explanation of Changes” section.

2. Confirm the Validity of Adjustments

Compare CRA’s numbers with receipts, slips, and your records.

3. Respond Quickly

You have 90 days to dispute it—missing this deadline limits your rights.

4. Gather Supporting Documents

Receipts, invoices, contracts, bank statements, and financial records are required.

5. File a Notice of Objection (if incorrect)

This triggers an independent review by CRA Appeals.

6. Avoid Paying Immediately if Disputing

Income-tax balances are generally not collected during objections.

When CRA Can Reassess Beyond Three Years

CRA can reassess beyond the normal period if they believe there was: neglect, carelessness, willful default, gross negligence, failure to report income, tax shelter misuse, or a false statement. Proper documentation is essential to defend against extended reassessments.

Common Mistakes Taxpayers Make

Ignoring reassessments, assuming CRA is correct without checking, missing the objection deadline, paying immediately without disputing, or failing to provide documentation. These can lead to unnecessary taxes and penalties.

Mackisen Strategy

At Mackisen CPA Montreal, we analyze CRA assessments and reassessments for accuracy, prepare strong Notices of Objection when needed, gather supporting documentation, challenge CRA errors, negotiate with CRA Appeals, and protect you from unnecessary taxes and penalties. We also correct prior filings to prevent future reassessments.

Real Client Experience

A Montreal investor reversed a reassessment based on incorrect capital gains calculations. A business owner avoided a large payroll reassessment after we proved CRA misclassified contractor payments. A taxpayer recovered denied medical credits through our objection submission. A landlord overturned a reassessment by proving renovation expenses were legitimate.

Common Questions

Do I have to pay after a reassessment? Not while an objection is active (for income tax). Can I appeal a reassessment years later? Only under specific rules. Can CRA reassess multiple years at once? Yes. Does a reassessment mean audit? Often—yes.

Why Mackisen

With more than 35 years of combined CPA experience, Mackisen CPA Montreal helps taxpayers understand and respond to CRA Assessments and Reassessments strategically. We protect your rights, reduce tax exposure, and ensure CRA decisions are accurate and legally compliant.