Income Tax Reassessment
If you get a Notice of Reassessment from Canada Revenue Agency, take a good look at it and find out why you got it. You donít want to face future penalties!
Often a Notice of Reassessment is issued because a tax slip was not included when the taxes were filed.
I find it often happens to young people who may have more than one employer for the year and itís hard to keep track of all the T4s you are expecting. Itís important you keep track of all your employers and make sure you get T4s from all of them. The best way is to keep all of your pay stubs until you file your taxes to make sure you have T4s for all of them.
If you are missing one and canít get one, make sure you report your income and deductions based on the last pay stub you received from that employer. You must report all income regardless of whether you received a tax slip or not.
Parents: help your children with this. Make sure they keep all their paystubs in one important place so they have them at tax time.
Another reason tax slips are missed is when tax payers move and not all slip issuers have the new address. Itís important that when CRA advises you that a tax slip was missed that you make sure you find out why you didnít get it.
f you forget to include the same tax slip two years in the past four, you can face penalties. And they can be hefty! You can face a 20% penalty of the amount of income you did not include.
Some of my clients have a tick sheet they use every year to keep track of all the tax slips they should be getting. And usually when I complete someoneís taxes, I do a comparison to last year to see if anything was missed. Sometimes I catch an item missing (normally a tax slip for employment insurance; they are often obtained on-line only, so donít expect to get one in the mail). But if you have lots of investment income tax slips, I may not catch them all.
So if you get a Notice of Reassessment, donít just pay it (often itís an amount owing) and file it away without first finding out why you got it in the first place.
If you are not sure, give me a call or come and see me; I can help you sort through it and get you back on track with CRA. Avoiding a 20% penalty should be incentive enough!
Anni Markmann is a tax professional and owner of Ste Anne Tax Service, working, living, and volunteering in our community. Contact Anni at 204-422-6631 or email@example.com or 36 Dawson Road in Ste Anne.