CRA letters, decoded

Work out which one you have

Letters rarely announce themselves clearly. Match what yours says to the middle column.

What to do in the first hour

Almost every one of these gets worse slowly and better quickly. The order that matters:

• Find the deadline. It is usually a specific date rather than a number of days, and it is usually the only hard constraint in the letter.
• Read what is actually being asked for. Most of these want one document or one explanation, not a defence of your whole year.
• Do not send more than was asked. Volunteering unrelated records widens the question rather than closing it.
• Reply even if the answer is “I need longer”. Silence is what converts a request into an assessment made without you.

Why owner-managers get more of these

An incorporated owner files more returns than an employee does, a T2, a T1, GST/HST, payroll remittances and slips, and every one of them is a surface where the CRA’s records and yours can disagree. Most of these letters are the CRA noticing a difference between two things it already holds, which is why they so often resolve with a single document.

The exception is the demand to file. That one is not a question, and the cost of leaving it grows.

What the CRA is actually doing when it writes

Almost none of these letters is the start of an investigation. The CRA holds a great deal of information about a corporation that it did not get from the corporation — slips filed by third parties, remittances recorded against a payroll account, GST/HST returns from suppliers and customers, registry data. Most letters are the result of one of those records disagreeing with something you filed, or with something the CRA expected and did not receive.

That is why so many of them close on a single document. The question being asked is usually narrow and factual: which figure is right, and what supports it. A reply that answers exactly that question, and nothing else, ends the correspondence faster than one that explains the whole year.

How long you have, and what happens if you miss it

Each letter carries its own date, and the dates are not interchangeable. A review usually gives a fixed window to produce records. A demand to file gives a date by which a return must be in. An instalment reminder gives dates for payments rather than for a response at all.

Missing them does not produce the same result either. Miss a review deadline and the CRA generally decides on the information it already has, which usually means the deduction or credit in question is denied. Miss a demand to file and the CRA can assess the return itself, from its own estimate of your income, and that assessment stands until it is displaced by a real return, with interest running from the original due date in the meantime. The gap between those two outcomes is the reason the demand letter is the one to deal with first when more than one has arrived.

Who should answer it

A letter addressed to the corporation can be answered by a director, or by a representative the corporation has authorised. If a firm is already authorised on the account it can usually see the letter in the CRA’s system and deal with it directly, which is faster than forwarding paper back and forth. If nobody is authorised, that is the first step rather than the reply itself.

What a good reply looks like

Answer the question that was asked, attach only the records that support that answer, and reference the letter’s own identifiers so it reaches the right file. If the full answer needs longer than the window allows, say so before the deadline rather than after, a request for time on the record is treated very differently from silence.

Nearly every letter on this page is a symptom of a filing or a figure, and the tax work behind most of these letters is where that gets addressed.

Keep a copy of what was sent and the date it went. A meaningful share of disputes are not about the substance at all but about whether something was received, and the only party who can prove that is the one who kept the record.

Common questions about CRA letters