Every year after you file your personal income taxes, Canada Revenue Agency (CRA) sends you a Notice of Assessment (NOA). On this NOA, CRA will state any information that relates to changes made during their processing of your return, what any carry forwards for non-capital and net capital losses will be, information on your current TFSA, and what is your next year RRSP contribution limit.
Occasionally, you find that something has been changed by CRA due to information they received that you perhaps didn’t get, such as an additional slip, or carry forwards you may have forgotten about. It could also have been a mistake during the preparation of your return.
The most common mistake we find is the missing slip. You had more than one job in the tax year, or non-registered investments that send out a slip you don’t get or that slip comes after you’ve done your taxes. If you do have non-registered investments, allow enough time for those slips to come before you file your taxes. T3 Statement of Trust Income Allocations and Designations slips are the last slips you’ll usually receive. I find it best to wait until Mid-March or later to do your taxes, if you get any kind of slip for non-registered investments. Those slips usually come on a T3, T5, 5008.
Another slip that is commonly forgot about is the T4RSP, which is a slip you receive when you take money out of your RRSP during the year. It is amazing how many people forget they did this, do their taxes, and then get a NOA very different from what they thought it would be. This can be a major difference depending on how much you withdrew, and what was your income for that year.
For those of you that still paper file, yes there are still people using paper, addition errors are the biggest mistake. Double, and triple, check your addition and subtraction. Make sure that you have the correct figures before you send in your return. A good idea is to do it in pencil (never file your return in pencil) first then do it over in pen. If you’ve paid based on what you’ve filed, and you file too close to the deadline, you may be charged penalties and interest if the balance owing goes above what you already paid, and CRA processes your return after April 30th.
Your instalment payments are another item that can make your NOA different from what you filed. Sometime in February you get a statement of instalments paid that apply to the prior tax year. It’s best to make sure you get this statement before filing, and call CRA if you don’t have it by March. Always ensure exactly what you paid for instalments for the prior tax year before filing your taxes.
When you do get your NOA check it, and compare it to what was filed. If you used a tax preparer, send it to them, so they can see what happened after your return was filed. It’s important to check your NOA so next year you know for what to look when you go to prepare your next year’s taxes.