Introduction
A corporation files its T2 for the year ended December 31, 2023. The return is accepted — a Notice of Assessment is issued. Life continues. Then, in the spring of 2026, a Notice of Reassessment arrives, adding $85,000 to the corporation's taxable income and demanding $27,000 in additional tax plus interest. What now?
Reassessments are a normal part of the CRA's compliance process. They can result from desk reviews, information matching with third parties, or full field audits. The process for responding to a reassessment — and the options available — is something every incorporated business owner should understand before it happens.
The Normal Reassessment Period
For most corporations, the CRA has three years from the date of the original assessment to reassess. This is the normal reassessment period. For CCPCs, the period is extended to four years.
After the normal reassessment period expires, the CRA can no longer reassess unless:
The taxpayer (or an associated person) has made a misrepresentation attributable to neglect, carelessness, or wilful default — in which case there is no limitation period.
The taxpayer waived the limitation period in writing.
The reassessment relates to a specific category (international transactions, tax shelters) where extended periods apply.
The existence of a time limit is important — it means the CRA's ability to reassess is not unlimited, and most ordinary reassessments are confined to the normal three to four year window.
What Triggers a Reassessment
Common triggers for a corporate reassessment:
Audit findings: A field audit of the corporation results in the auditor proposing adjustments — disallowing expenses, reclassifying transactions, or adding income. A formal reassessment implements those adjustments.
Third-party information matching: The CRA receives information from other sources (T4As filed by clients, customs records, real estate transactions) that does not match what is reported on the T2.
Related-party review: A reassessment of a related corporation (a partner's company, a customer, a supplier) reveals transactions that affect the corporation's return.
Random review: The CRA selects returns for review through its risk-scoring system.
The Reassessment Document
A Notice of Reassessment shows:
The original assessed amount
The changes being made
The revised tax owing
The interest accrued to the date of the notice
The balance due (or refund, if the reassessment is in the taxpayer's favour)
The notice does not explain the basis for the reassessment in detail — that explanation comes from the accompanying proposal letter or audit report. The corporation has 90 days from the date of the notice to file a Notice of Objection if it disagrees with the reassessment.
Filing a Notice of Objection
A Notice of Objection (Form T400A) is filed with the CRA's Appeals Division. It must be filed within 90 days of the date of the Notice of Reassessment — or within one year of the filing due date for the return in question, whichever is earlier.
The objection should:
Identify the specific items being disputed
State the facts supporting the taxpayer's position
Cite the relevant legal authority (Income Tax Act provisions, case law, CRA administrative positions)
Be as specific and supported as possible — a vague objection is difficult for the Appeals Officer to resolve in the taxpayer's favour
The CRA's Appeals Division reviews the objection independently of the auditor who conducted the original review. This independence is meaningful — many objections are resolved at the appeals stage, either through a negotiated resolution or through the Appeals Officer overturning all or part of the reassessment.
If the Objection Is Unsuccessful
If the objection is denied or partially denied, the taxpayer can appeal to the Tax Court of Canada. Tax Court proceedings are more formal and more expensive — legal representation is strongly advisable. For amounts under $25,000 in dispute, the Tax Court's Informal Procedure applies, which is faster and less formal than the General Procedure.
Interest Accrues During the Objection
Importantly, filing a Notice of Objection does not stop interest from accruing on the disputed amount. Interest continues to compound from the original payment due date until the reassessment is resolved. If the objection is ultimately successful, the CRA refunds the disputed tax plus interest. If the objection fails, the interest has been accruing throughout.
When to Speak With a CPA
A CPA should be the first call when a Notice of Reassessment is received — before responding to the CRA in any way. The 90-day objection window is a hard deadline. Engaging a CPA (and potentially a tax lawyer for large amounts) promptly ensures the objection is filed correctly and the strongest possible case is presented.
Rotaru CPA assists corporations with CRA reassessments, objections, and appeals. Book a consultation if you have received a reassessment.