Introduction
Incorporated business owners often describe receiving CRA correspondence as stressful, regardless of what the correspondence actually says. Some of it is routine and administrative. Some of it requires a timely response. A small amount requires urgent attention.
Knowing the difference matters. Missing a deadline on a correspondence that requires action — because it was assumed to be routine — can result in reassessments, penalties, or lost appeal rights. Panicking over a standard Notice of Assessment and taking unnecessary action wastes time and creates unnecessary cost.
This article explains the five most common types of CRA correspondence that incorporated business owners receive, what each one means, and what the appropriate response is.
1. Notice of Assessment (NOA)
A Notice of Assessment is issued by the CRA after it processes a filed T2 or T1 return. It confirms what the CRA has assessed as the taxable income, the tax payable, and any balance owing or refund owing.
For a T2, the NOA arrives after the T2 is processed — typically several weeks to a few months after filing. It may reflect the return exactly as filed, or it may include adjustments where the CRA has identified a discrepancy.
What to do: Review the NOA against the filed return. If the assessment reflects the return exactly, file it and confirm with your CPA that the numbers match. If there are differences, bring the NOA to your CPA immediately — there is a 90-day objection period from the date of the NOA within which a formal objection can be filed. Missing this deadline can affect appeal rights.
2. Instalment Reminder
The CRA issues instalment reminders to corporations that are expected to owe tax in the current year based on prior year filings. The reminder indicates the suggested instalment amounts and the due dates.
For most CCPCs, corporate tax instalments are due on the last day of each month following the end of the first taxation month. The final balance is due two months after the fiscal year end (three months for qualifying CCPCs).
What to do: Review the instalment amounts with your CPA and make payments on schedule. Instalments that are not made will result in instalment interest charges, even if the final return shows no balance owing.
3. Request for Information (Requirement Letter or Questionnaire)
The CRA conducts reviews of filed returns that do not constitute full audits. These reviews may be triggered by specific items on the return — large deductions, unusual expense categories, or statistical anomalies — or may be part of a broader industry or segment review.
A request for information letter asks the taxpayer to provide supporting documentation for specific items on the return — receipts, contracts, bank statements, vehicle logbooks, or explanations of particular transactions.
What to do: Do not ignore this letter and do not respond without speaking to your CPA first. The deadline for response is typically 30 days from the date of the letter. Late or incomplete responses can result in the CRA disallowing the items under review. Your CPA should review the request, compile the appropriate documentation, and coordinate the response.
4. Proposal Letter (Pre-Reassessment Letter)
A proposal letter is a more serious form of CRA communication. It indicates that the CRA has completed a review and intends to reassess the return — changing the income, disallowing expenses, or assessing a benefit or penalty. The proposal letter sets out the CRA's proposed adjustments and gives the taxpayer an opportunity to respond before the reassessment is formally issued.
What to do: This requires immediate attention. The response window is typically 30 days. Your CPA should review the proposed adjustments, assess whether the CRA's position is correct or disputable, and prepare a written response. Where the CRA's position is disputable, a well-supported response at the proposal letter stage can result in the adjustments being withdrawn without the need for a formal objection.
5. Notice of Reassessment
A Notice of Reassessment is issued when the CRA has changed the assessment from a previously filed return — whether following a review, an audit, or in response to a taxpayer-requested amendment. It reflects the new assessed amounts and any resulting balance owing.
What to do: The same 90-day objection period applies from the date of the reassessment. If the reassessment is in error or the CRA's position is disputable, a Notice of Objection must be filed within that period. After 90 days, appeal rights to the Tax Court are still technically available but with more limited grounds. Do not pay a reassessment you dispute without first consulting a CPA — payment does not constitute acceptance, but prompt action on the objection timeline is important.
A Note on Deadlines
CRA deadlines are real and generally not extended. A 90-day objection period that expires before action is taken can foreclose appeal rights, regardless of the merits of the position. When CRA correspondence arrives — through the mail or through My Business Account — it should be reviewed promptly and brought to your CPA's attention without delay.