On Posted on by Dellendo Farquharson to Accounting and Tax, Corporate Taxes, Personal Taxes

Notice of Assessment (NOA) in Canada

When you file your taxes in Canada, the Canada Revenue Agency (CRA) reviews your submission and provides you with a critical document known as the Notice of Assessment (NOA). This document is essential for understanding your tax situation and serves as the CRA’s formal response to your tax return. Whether you are a first-time filer or a seasoned taxpayer, knowing what an NOA is and how to interpret it is vital for financial planning and compliance.

This guide will explain the purpose of an NOA, how to access it, and what information it contains, providing examples to help you fully understand this important document.

What Is a Notice of Assessment (NOA)?

A Notice of Assessment (NOA) is a statement issued by the CRA after reviewing your tax return. It outlines the details of your return, including the income reported, tax credits claimed, deductions applied, and any taxes owed or refunds due. Essentially, it confirms the CRA’s calculations based on the information you provided and highlights any adjustments made during the assessment process.

For example, if you filed your tax return reporting an income of $50,000 and claimed $5,000 in deductions, the NOA will verify whether the CRA agrees with these figures. It will also specify whether you have a balance owing, a refund, or a zero balance (meaning no tax is owed or refundable).

Why Is the NOA Important?

The NOA is more than just a confirmation of your tax filing—it’s a document you may need for various financial and administrative purposes. Here’s why it’s important:

  1. Proof of Income: Many financial institutions require your NOA to verify your income when applying for loans, mortgages, or other financial products.
  2. Tax Planning: The NOA provides a summary of unused deductions and credits, such as RRSP contribution room, which can help you plan for the next tax year.
  3. Dispute Resolution: If you disagree with the CRA’s assessment, the NOA serves as the starting point for filing an objection or appeal.
  4. Personal Records: It’s a valuable record of your tax history and ensures you stay compliant with CRA requirements.

How to Access Your NOA

The CRA offers multiple ways to access your NOA, ensuring convenience and security. Here are the most common methods:

  • Online via My Account: You can view and download your NOA through the CRA’s online portal, “My Account.” This method is fast and paperless, making it the most popular choice.
  • Mail: If you prefer or request it, the CRA can mail a physical copy of your NOA to your address on file.
  • Email Notification: If you’ve opted for electronic communications, the CRA will send you an email notification when your NOA is available online.

To access your NOA online, ensure you have registered for “My Account” on the CRA website. You’ll need your Social Insurance Number (SIN), date of birth, and a few additional details from a prior tax return to create or log in to your account.

What Information Does the NOA Contain?

The NOA provides a wealth of information about your tax return. Understanding its contents is crucial for effectively managing your taxes and planning for the future. Below is a breakdown of the key sections typically found in an NOA:

1. Summary of Your Tax Return

This section provides an overview of the income, deductions, and credits reported on your tax return. It shows the CRA’s calculation of your total income, taxable income, federal and provincial taxes payable, and any amounts already paid.

Example:

  • Total Income: $60,000
  • Total Deductions: $8,000
  • Taxable Income: $52,000
  • Federal Tax Payable: $7,800
  • Provincial Tax Payable: $4,200

2. Refund or Balance Owing

This section specifies whether you owe taxes or are entitled to a refund. It also details any penalties or interest applied due to late filing or errors in your return.

Example:

  • Total Tax Owed: $12,000
  • Total Tax Paid: $12,500
  • Refund: $500

If you owe taxes, the NOA will include a due date for payment to avoid additional interest or penalties.

3. RRSP Deduction Limit

The NOA outlines your updated RRSP contribution room, which is based on your earned income and any unused contribution room from previous years.

Example:

  • Contribution Room for 2023: $18,000
  • Contributions Made in 2023: $12,000
  • Unused Contribution Room: $6,000

This information is crucial for tax planning, as over-contributing to an RRSP can result in penalties.

4. Carryforward Amounts

The NOA includes details of unused amounts you can carry forward to future tax years, such as tuition credits or investment losses.

Example:

  • Unused Tuition Credits: $3,000
  • Net Capital Losses: $2,500

5. Tax Adjustments

If the CRA made changes to your return during the assessment process, such as correcting errors or disallowing certain claims, these adjustments will be explained in this section.

Example:

  • Claimed Medical Expenses: $2,000
  • CRA-Approved Medical Expenses: $1,500
  • Adjustment: -$500

6. Additional Information

This section may include important reminders, such as upcoming tax deadlines or new CRA policies that could affect your future filings.

What Should You Do After Receiving Your NOA?

After receiving your NOA, take the following steps to ensure accuracy and compliance:

  1. Review the Details: Carefully compare the information on your NOA with your original tax return. Look for discrepancies, such as adjustments made by the CRA.
  2. Address Errors: If you notice an error on your NOA or disagree with the CRA’s assessment, you can request a formal review by filing a Notice of Objection within 90 days.
  3. Plan for Payments or Refunds: If you owe taxes, make your payment by the due date to avoid penalties. If you’re receiving a refund, decide whether to save, invest, or spend it wisely.
  4. Keep Your NOA for Records: Store your NOA securely, as you may need it for future financial or tax purposes.

Common Questions About the NOA

What If I Don’t Receive My NOA?

If you don’t receive your NOA within a reasonable time after filing your taxes, check your CRA “My Account” or contact the CRA directly. Delays can occur if your tax return requires additional review.

Can I Dispute My NOA?

Yes, if you disagree with the CRA’s assessment, you can file a Notice of Objection. Ensure you provide supporting documentation and a clear explanation of why you believe the assessment is incorrect.

How Long Should I Keep My NOA?

The CRA recommends keeping your NOA and related tax documents for at least six years, as they may be required during an audit or review.

Conclusion

The Notice of Assessment (NOA) is an essential document that provides clarity and confirmation about your tax return. By understanding its purpose, contents, and implications, you can ensure compliance with CRA rules and make informed financial decisions. Whether you need the NOA for tax planning, proof of income, or resolving disputes, it’s a key part of managing your taxes in Canada.

For expert guidance on understanding and managing your NOA, contact BOMCAS Canada at info@bomcas.ca or visit BOMCAS Canada. Our team is here to simplify your tax journey and ensure you make the most of your financial opportunities.