CRA Notices for Corporations Explained

Receiving a letter from the Canada Revenue Agency does not automatically mean that your corporation is being audited. The CRA routinely contacts businesses to confirm the processing of a return, request supporting documents, report an account balance or explain an adjustment.

A CRA letter should never be ignored, however. Some communications include a response deadline, while a notice of assessment or reassessment may start the legal time limit for disputing the CRA’s decision.

This guide to CRA notices for corporations explained will help business owners recognize the most common types of correspondence, understand what they mean and decide what to do next.

Why does the CRA contact corporations?

A corporation may receive correspondence about several program accounts linked to its business number, including:

• corporate income tax — RC account;
• GST/HST — RT account;
• payroll deductions — RP account;
• information returns — RZ account;
• other programs administered by the CRA.

The first step in understanding CRA letters for a business is therefore to identify the account, reporting period and return involved. A payroll notice should not be handled as though it were a letter about the corporation’s T2 income tax return.

1. CRA notice of assessment for a corporation

After processing a T2 return, the CRA normally issues a corporate notice of assessment. It explains how the return was assessed and may show:

• taxable income;
• federal and applicable provincial or territorial tax;
• credits and payments applied;
• penalties and interest;
• a balance owing or refund;
• loss balances and certain other tax attributes;
• adjustments made during processing.

A notice of assessment does not necessarily mean that the CRA has examined every transaction in detail. A return may initially be assessed as filed and later selected for review or audit within the limits permitted by law.

What should the corporation check?

The accountant or business owner should compare the notice with the filed T2 return and confirm that:

1. taxable income and tax agree with the return;
2. instalments and other payments were properly credited;
3. loss carryforward and tax credit balances are correct;
4. no schedule or claim was denied or changed;
5. the account balance agrees with the corporation’s records.

A difference does not automatically mean that the CRA made an error. It could result from a payment applied to another period, a mathematical correction, missing information or an adjustment made while processing the return.

2. Notice of reassessment

The CRA issues a notice of reassessment when it changes an assessment that was previously issued. This may happen:

• after the corporation requests an amendment;
• following a review or audit;
• when the CRA receives new information;
• when an amount is omitted or revised;
• after a loss or tax credit is carried back.

The reassessment should be compared with the original return, the previous assessment and any correspondence that led to the adjustment.

A reassessment may create additional tax, reduce a refund or change tax balances available for future years. Even if there is no immediate amount to pay, a change to losses or credits could materially affect later tax returns.

3. Review letter or request for information

The CRA may request documents to verify amounts reported by the corporation. Examples include:

• financial statements and the trial balance;
• details of selected expense accounts;
• invoices, contracts and proof of payment;
• small business deduction calculations;
• information about associated corporations;
• revenue reconciliations;
• dividend, shareholder or related-party records.

An information request or limited review is not necessarily a full tax audit. It may be intended only to validate a particular deduction, credit or item on the return.

The corporation must still respond by the deadline in the letter. If the documents cannot be assembled in time, the corporation should contact the assigned officer before the deadline to ask whether additional time is available.

A structured response is usually more effective than sending a large volume of unexplained records. Each document should be connected to the question it is intended to answer.

4. Proposed adjustment letter

Before issuing a reassessment following a review or audit, the CRA may send a letter explaining its proposed adjustments.

This is an important stage because the final reassessment may not yet have been issued. The corporation may have an opportunity to clarify incorrect facts, explain its tax treatment or submit additional evidence.

The response should address:

• the facts relied on by the CRA;
• the tax provisions or reasoning cited;
• the proposed calculations;
• documents supporting the corporation’s position;
• the response deadline.

A thorough response at this stage may prevent an incorrect reassessment and the need for a formal objection.

5. Corporate tax instalment notices

The CRA may send reminders or statements showing suggested corporate income tax instalments based on information already on the account.

These figures do not replace a current calculation of the corporation’s actual instalment requirements. If anticipated income or tax has changed, the instalment schedule should be recalculated.

Insufficient or late instalments can result in instalment interest and, in some situations, an additional penalty. Conversely, relying blindly on historical estimates could unnecessarily tie up cash when the company’s results have declined.

6. Payroll statements and notices

An employer may receive a PD7A Statement of Account for Current Source Deductions or letters concerning:

• missing or late remittances;
• differences between deductions reported and paid;
• missing T4 slips;
• penalties or interest;
• debit or credit balances.

The corporation should regularly reconcile its CRA payroll account with its payroll reports and general ledger. The PD7A is among the documents the CRA may deliver electronically through My Business Account. The CRA identifies the types of business correspondence available online.

Payroll notices require prompt attention because deductions withheld from employees are amounts held and remitted by the employer on the government’s behalf.

7. GST/HST notices

A GST/HST registrant may receive:

• a notice of assessment or reassessment;
• a request concerning reported sales;
• a request for invoices supporting input tax credits;
• a notice about an unfiled return;
• a statement showing a balance, interest or penalties;
• a request for information before a refund is released.

The corporation should confirm that the notice covers the correct reporting period and reconcile it with filed returns, payments, credits and accounting records.

For a Quebec corporation, GST and QST are generally administered by Revenu Québec. It may therefore receive separate provincial correspondence in addition to federal corporate income tax notices from the CRA.

8. Collection notices and payment demands

When a balance remains unpaid, the CRA may ask the corporation to pay or contact a collections officer to discuss an arrangement.

A collection notice is different from an information request. At this point, an amount has generally already been recorded on the account. The corporation should promptly:

1. confirm that the debt is accurate;
2. check whether any payment was misapplied;
3. determine whether an objection or other proceeding is underway;
4. pay the amount or contact the CRA if immediate payment is not possible.

An important distinction applies to corporations: the CRA states that it may continue collecting certain assessed corporate debts even when an objection or Tax Court appeal has been filed. The applicable rules depend on the type of debt. See the CRA’s explanation of collection action and legal warnings.

What should you do when a CRA letter arrives?

Verify that it is genuine

Sign in to My Business Account directly rather than following an unexpected email or text-message link. Check whether the correspondence appears in the corporation’s online mail.

The CRA will not demand immediate payment through cryptocurrency, gift cards, PayPal, Interac e-Transfer or another unusual method. Aggressive threats and unusual payment instructions are warning signs.

Identify the account and reporting period

Record the business number, program account, fiscal year or reporting period and reference number shown on the letter.

Read the complete letter

Determine:

• what the CRA is requesting;
• which amounts are affected;
• who is handling the file;
• how the corporation can respond;
• the applicable deadline;
• what may happen if the corporation does not respond.

Send the complete letter to your CPA

The first page alone may not provide enough information. Send every page, including schedules, calculation sheets and enclosures.

Prepare a documented response

The response should be clear, organized and supported by relevant evidence. Keep a copy of everything submitted, along with proof of when and how it was sent.

How long does a corporation have to dispute an assessment?

A corporation generally has 90 days from the date of the notice to file a formal objection to a notice of assessment, reassessment or certain determinations.

Calling the CRA for an explanation does not automatically suspend this deadline. If the issue cannot be resolved promptly, the corporation should protect its rights by filing the objection on time. A corporate tax compliance checklist can help track notice and filing deadlines.

In certain circumstances, an extension request may be made within one year after the original objection deadline expired, subject to statutory conditions. It is much safer to meet the original deadline. The CRA summarizes the corporate dispute process and deadline.

CRA online mail for businesses

Most CRA business correspondence is now available online through My Business Account. The CRA considers online correspondence received on the date it is posted to the account—not the date the owner or accountant eventually opens it.

Corporations should therefore:

• keep their CRA email address current;
• monitor new-mail notifications;
• check My Business Account regularly;
• maintain appropriate access for responsible personnel;
• establish coverage during vacations and other absences.

Notices of assessment, notices of reassessment, PD7A statements and most other letters and statements may be delivered online. See the CRA’s guidance on online mail for businesses.

Common mistakes when handling CRA correspondence

Many problems result from weak administrative follow-up rather than difficult tax law. Common mistakes include:

• assuming the CPA automatically received the same letter;
• confusing a document request with an assessment;
• sending the accountant only part of the correspondence;
• missing a deadline because online mail was not monitored;
• paying without checking the program account and period;
• submitting records without an explanation;
• assuming an informal phone call preserves objection rights;
• ignoring a notice because the corporation is inactive.

An inactive corporation may still have filing obligations and may continue receiving CRA notices. See also our guide to late corporate tax filing penalties in Canada.

Frequently asked questions

Does a corporate notice of assessment mean the T2 return is permanently accepted?

No. It confirms how the return was processed and assessed at that time. The CRA may later review or audit the return and, where legally permitted, issue a reassessment.

Is a review letter the same as a tax audit?

Not necessarily. A review may focus on one amount or document. A business audit is generally broader and can involve a detailed examination of the corporation’s books, records and supporting documents. The CRA explains its business audit process.

Does the corporation’s CPA automatically receive every CRA letter?

No. Access can depend on the representative’s authorization, delivery preferences and type of correspondence. The corporation remains responsible for monitoring its account and promptly forwarding relevant letters.

Can a letter be ignored if it does not show an amount owing?

No. A letter without an immediate balance may request evidence, change tax losses or propose an adjustment with significant future consequences.

Must the corporation pay before disputing an assessment?

That depends on the type of debt and the circumstances. The collection protections available to individuals do not apply in exactly the same way to corporate accounts. Professional advice should be obtained promptly when a material assessment is disputed.

The bottom line

Understanding CRA letters for a business begins with a simple distinction: is the correspondence confirming something, requesting information, changing a tax result or pursuing collection?

Every notice should be reviewed for the program account, reporting period, amounts, deadline and required response. Acting early can often resolve a minor discrepancy before it becomes a reassessment, additional interest or a collection problem.

T2Online.ca, DFD-CPA’s specialized corporate tax service, assists Canadian corporations with T2 preparation, review of corporate notices of assessment and responses to CRA corporate tax correspondence.