by Elias Zafiridis

by Bhavika Chadha

CRA ArticlesJune 3, 20251 comment

Reassessment Period CRA: What Every Taxpayer Should Know

When the Canada Revenue Agency (CRA) issues a Notice of Assessment, many taxpayers assume their tax affairs for that year are settled. However, the CRA has the legal authority to reassess tax returns under certain conditions—sometimes years after the original filing. This window of time is known as the reassessment period, and understanding its rules is critical for both individuals and businesses in Canada.

This article explores the CRA’s reassessment period in detail, including timelines, exceptions, and what to do if you’re facing a reassessment.

What Is the Reassessment Period?

The reassessment period refers to the amount of time the CRA has to review and adjust a previously assessed tax return. During this window, the CRA may conduct audits, request additional information, or issue a Notice of Reassessment if they determine that tax was underpaid or claimed incorrectly.

Once the reassessment period expires, the taxpayer is generally considered to have finality on that return—unless fraud or misrepresentation is involved.

Standard Reassessment Periods in Canada

The standard reassessment periods differ depending on the type of taxpayer:

• Individuals and Canadian-controlled private corporations (CCPCs): 3 years from the date of the original Notice of Assessment

• Other corporations and trusts: 4 years from the date of assessment

The clock starts on the date printed on your original Notice of Assessment, not the filing date.

Example: If an individual files their 2022 tax return in April 2023 and receives a Notice of Assessment dated May 10, 2023, the CRA has until May 10, 2026, to reassess that return.

When Can the CRA Reassess After the Standard Period?

In certain situations, the CRA is allowed to reassess a return for an additional three years beyond the normal reassessment period. This extended reassessment period applies to corporations and is triggered by specific tax events, including:

• Loss carrybacks: Applying a non-capital or net capital loss from a future year to a prior tax year.

• Non-arm’s length transactions involving non-residents that affect the corporation’s Canadian tax obligations.

• Foreign tax matters, such as refunds of foreign income or profits taxes, or income related to foreign affiliates (post-February 26, 2018).

• Reassessments affecting related parties, where another taxpayer’s reassessment impacts the corporation’s taxes.

• Non-resident business structures, including notional transactions (like “branch advances”) or allocations of income and expenses from a foreign affiliate or parent.

• Trust and foreign investment rules, especially under sections 94.1 and 94.2 of the Income Tax Act.

• Prescribed forms: Where a taxpayer files an amendment on time to carry back losses or claim specific credits, and CRA needs more time to process the change.

There are several exceptions that allow the CRA to reassess a return even after the normal reassessment window has closed. The CRA is permitted to reassess a tax return at any time, even after the standard reassessment period (3 or 4 years) has expired. This is known as the unlimited reassessment period and generally applies in two key scenarios:

• Misrepresentation or Fraud: If a taxpayer has made a misrepresentation on their return due to neglect, carelessness, wilful default, or fraud—whether in filing the return or providing information required under the Income Tax Act—the CRA may reassess that return without any time limit.

• Waiver by the Taxpayer: A taxpayer can voluntarily extend the reassessment period by filing Form T2029, Waiver in Respect of the Normal Reassessment Period, with the CRA before the standard reassessment period expires. This is commonly used during audits where more time is needed to resolve complex issues. The waiver allows reassessment up to three additional years, depending on the nature of the issue.

The above-noted scenarios are just a few of the many situations in which the CRA may extend—or even indefinitely extend—the normal reassessment period when seeking to reassess a taxpayer. This underscores the importance of being diligent and accurate when filing tax returns, and of remaining up to date with all required filings. Proactive compliance helps minimize the risk of reassessment and reduces exposure to penalties, interest, and prolonged audit scrutiny.

What Triggers a CRA Reassessment?

There are several common reasons why the CRA might initiate a reassessment:

• A discrepancy is found during an audit or review

• New information is obtained from third parties (e.g. employers, banks, foreign governments)

• The taxpayer amends their own return

• A related return (e.g. a spouse or business partner’s return) is audited and adjustments are required across multiple files

• The CRA believes there has been a misrepresentation or omission

Reassessments can result in additional taxes owed, as well as penalties and interest if the CRA believes the error was serious.

How to Respond to a Notice of Reassessment

If you receive a Notice of Reassessment, it’s important not to ignore it. Here’s what to do:

1. Review the reassessment carefully: Understand what changes the CRA made and why.

2. Request supporting documents: If it’s unclear, contact the CRA to ask for their working papers or audit findings.

3. Pay the amount due or object: If you agree with the reassessment, you must pay the revised amount by the due date. If you disagree, you have 90 days from the date on the Notice of Reassessment to file a formal Notice of Objection.

4. Consult a tax professional or lawyer: A qualified representative can help you assess your legal position and respond strategically.

Can You Reassess Your Own Return?

Yes. Taxpayers can request adjustments to previously filed tax returns within the normal reassessment period. This is done by filing a T1 Adjustment Request for individuals or an amended T2 for corporations. The CRA may accept the change and issue a reassessment accordingly.

Why the Reassessment Period Matters

The reassessment period provides both the CRA and the taxpayer with a defined timeline for review and finality. For taxpayers, it ensures that they are not subject to indefinite scrutiny—unless serious misconduct has occurred. For the CRA, it allows time to verify compliance and correct errors that may not be obvious on initial filing.

Understanding this timeline is especially important when:

• You’re disposing of documents (you should retain tax records for at least six years)

• You’re undergoing an audit

• You’re considering filing an objection or appeal

• You’re involved in complex transactions or offshore holdings

How a Tax Lawyer Can Help

If you’re facing a reassessment—especially one outside the standard reassessment period—it’s essential to understand your rights and obligations. A tax lawyer can:

• Determine whether the CRA’s reassessment is within legal limits

• Help you file a Notice of Objection or appeal to the Tax Court of Canada

• Defend you in cases involving allegations of misrepresentation or fraud

• Assist in responding to CRA audit inquiries that could lead to reassessment

At Rosen & Associates Tax Law, we regularly assist individuals and businesses with CRA reassessments and audit defence. Whether you’re proactively managing tax risk or dealing with a current dispute, we can help.

Schedule a free consultation to speak with an experienced tax lawyer and protect your financial position.

Disclaimer: This article provides information of a general nature only. It does not provide legal advice nor can it or should it be relied upon. All tax situations are specific to their facts and will differ from the situations in this article. If you have specific legal questions, you should consult a lawyer.