Notional Assessments (When the CRA decides on their own what you owe them)
Late tax filing is very serious. The government has significant powers and resources to collect from you if you are behind filing returns.
Even if you have not filed your returns, employers have likely filed tax slips and clients have declared income paid to you as expenses on their returns. The CRA (Canada Revenue Agency), at any time, can use any information about you to create a notional assessment. A notional assessment is where the CRA essentially creates a tax return on your behalf. The CRA will estimate your income, estimate the tax debt you should owe and calculate interest and penalties on the estimated tax debt. They can then proceed to collect the money by leveraging enforcement action, such as CRA garnishments.
At any time, and even if you have been notionally assessed, you can still file your returns. When you have a tax problem, time is not your friend. The speed at which you file your late returns will be important. Certain expenses cannot be written off after a period of time has lapsed. A good example of this is HST expenses.
Don’t wait until the CRA notionally assesses you. If you have already been notionally assessed, you should re-file your returns as soon as possible. In many instances we have been able to re-file our clients’ notionally assessed returns and in doing so have reduced the size of their tax debt, penalties and interest. When approaching the CRA about notional assessments it is crucial to have representation from an organization that specializes in resolving tax problems.