What is the very first thing I should do when I get a reassessment?

Check the date on the notice and calculate your objection deadline (generally 90 days, or for individuals the later of 90 days or one year after the filing due date). The deadline drives everything else, so do not let it slip while you gather information.

Can I just call the CRA to fix a reassessment I disagree with?

You can call to ask questions, but a phone call does not preserve your formal dispute rights. To protect your position you should file a Notice of Objection within the deadline, even if you continue to discuss the matter informally.

Does interest stop while I object?

No. Interest continues to accrue daily on the debt throughout the objection and appeal process, because the CRA is presumed correct until proven otherwise. Making voluntary payments reduces the interest you will ultimately owe.

What if the reassessment is for GST/HST?

Trust amounts like GST/HST remain collectible even while you object, unlike income tax. Many taxpayers in this situation consider skipping ahead to the Tax Court of Canada (allowed 180 days after filing a GST/HST objection) to resolve an incorrect assessment faster.

How is the gross negligence penalty different from a late-filing penalty?

A late-filing penalty applies automatically when a return is filed late. A gross negligence penalty applies only where the CRA can show you knowingly or in circumstances amounting to gross negligence made a false statement or omission — and the CRA carries the burden of proving it.

Can the CRA reassess a year I thought was closed?

Generally no, once the normal reassessment period (three years for income tax, four for GST/HST) has passed. But the CRA can reopen statute-barred years if it alleges fraud or gross negligence, which is one reason to keep records longer than the minimum.

How to respond to a CRA reassessment

After the CRA processes your return it issues a Notice of Assessment showing what you owe. Later — often after a review or audit — it may issue a Notice of Reassessment changing those figures, usually not in your favour. A reassessment can feel alarming, especially when it comes with interest and penalties attached. This guide explains what a reassessment is, how the extra charges are calculated, and the time-sensitive steps to take if you think it is wrong.

What is the difference between an assessment and a reassessment?

A Notice of Assessment is issued after your GST/HST return, personal income tax return, or corporate return is first processed. If everything matches and you filed on time, the assessed amounts line up with what you reported.

A Notice of Reassessment is issued later when the CRA changes those figures — for example after an audit, a matching check against third-party slips, or a review of a particular deduction. Once a reassessment is issued, it replaces the previous assessment, and its contents become the official amount owing unless you formally challenge it within the deadline.

How are interest and penalties calculated?

Interest is charged on outstanding tax debts, is compounded daily, and is set at a rate that changes every quarter. When a return is filed late, interest is backdated to the date the payment was originally due — and it even accrues on penalty amounts. Because the CRA’s rate is typically higher than a bank’s, it is often cheaper to borrow elsewhere to pay the CRA than to let the balance sit.

Late-filing penalties for income tax start at 5% of the balance owing plus 1% for each full month the return is late, up to 12 months — a maximum of 17%. For taxpayers with repeat late filings, the penalty can double to 10% plus 2% per month for up to 20 months.

The most severe charge is the gross negligence penalty: 50% of the understated tax (25% for HST). Because it is so harsh, the burden of proof is reversed — the CRA must prove the penalty is justified, and a defect in the CRA’s "penalty recommendation report" can be grounds to have it dismissed.

Late-filing (income tax), first offence: 5% + 1%/month, max 17%
Late-filing (income tax), repeat offence: 10% + 2%/month, up to 20 months
Gross negligence: 50% of the understated tax (25% for HST)
Interest: compounded daily, rate set each calendar quarter

How long do I have to dispute a reassessment?

This is the deadline that matters most. To formally challenge a reassessment you file a Notice of Objection. For individuals (other than a trust), the deadline is the later of one year after the return’s filing due date, or 90 days from the date on the notice. For corporations and most other situations, it is 90 days from the date of the notice.

If you miss the 90-day window you can ask for an extension of up to one year, but after that the reassessment generally becomes permanent and can no longer be challenged. As Victory Over the CRA warns, if you wait too long an assessment can no longer be disputed and it becomes set in stone — so act quickly.

Do I have to pay while I dispute it?

It depends on the type of tax. When you object to an income tax reassessment (personal or corporate), collections activity on the disputed amount generally pauses — a "stall code" is applied — until the dispute is resolved. The disputed amount is treated as non-collectible during that time.

Trust amounts are the big exception. GST/HST and payroll source deductions are money you collected or withheld on behalf of the government, so they remain collectible even while in dispute. That means an incorrect HST assessment can still be actively collected while you fight it, which can take a year or more.

Even when collections are paused, it is often wise to make voluntary payments. Interest keeps accruing daily, every payment reduces the debt, and a history of voluntary payment builds goodwill if any balance ends up with a collections officer.

Can interest and penalties ever be cancelled?

Yes — but only the interest and penalties, never the underlying tax. The CRA’s taxpayer relief provisions let it waive interest and penalties at its discretion where they arose from extraordinary circumstances (such as serious illness, a natural disaster, or an accident), financial hardship, or the CRA’s own errors and delays.

You apply using Form RC4288, and you generally must have filed all your returns and have a payment arrangement in place. A strong, well-documented application is essential; relief is not granted just because you have a difficult story.

This is general information, not legal or tax advice — for your own situation, consult a qualified accountant or tax lawyer.

Frequently asked questions

What is the very first thing I should do when I get a reassessment?: Check the date on the notice and calculate your objection deadline (generally 90 days, or for individuals the later of 90 days or one year after the filing due date). The deadline drives everything else, so do not let it slip while you gather information.
Can I just call the CRA to fix a reassessment I disagree with?: You can call to ask questions, but a phone call does not preserve your formal dispute rights. To protect your position you should file a Notice of Objection within the deadline, even if you continue to discuss the matter informally.
Does interest stop while I object?: No. Interest continues to accrue daily on the debt throughout the objection and appeal process, because the CRA is presumed correct until proven otherwise. Making voluntary payments reduces the interest you will ultimately owe.
What if the reassessment is for GST/HST?: Trust amounts like GST/HST remain collectible even while you object, unlike income tax. Many taxpayers in this situation consider skipping ahead to the Tax Court of Canada (allowed 180 days after filing a GST/HST objection) to resolve an incorrect assessment faster.
How is the gross negligence penalty different from a late-filing penalty?: A late-filing penalty applies automatically when a return is filed late. A gross negligence penalty applies only where the CRA can show you knowingly or in circumstances amounting to gross negligence made a false statement or omission — and the CRA carries the burden of proving it.
Can the CRA reassess a year I thought was closed?: Generally no, once the normal reassessment period (three years for income tax, four for GST/HST) has passed. But the CRA can reopen statute-barred years if it alleges fraud or gross negligence, which is one reason to keep records longer than the minimum.