I received a reassessment notice, do I have to pay it now?
The amount is due as assessed, which is a separate question from whether it is correct. Disputing it does not undo the assessment, and the notice carries its own payment and objection dates that run independently of each other. So there are two decisions rather than one. First, whether to object, and on what basis, which means the validity of the reopening before the merits of the adjustment. Second, what to do about the balance while the objection is outstanding, given that interest continues to accrue on it. Taking the first decision and ignoring the second is how a winnable dispute becomes an expensive one.
What is the difference between a reassessment and an audit letter?
An audit letter asks; a reassessment decides. While a query is outstanding you are supplying information and the year stands as filed. Once a reassessment issues, the year has been changed, a balance exists, and your position has to be asserted through a formal objection within the period measured from that notice. The practical consequence is about pace. Correspondence tends to drift, and it is tempting to keep answering questions informally on the phone. The moment the notice arrives, the clock that matters is printed on it, and informality stops being safe.
Should I file an objection or just send the receipts?
Send the receipts by all means, but not instead of the objection. An informal exchange preserves nothing: if the documents fail to persuade, and the period measured from the notice has run out in the meantime, the assessment stands whatever the receipts showed. File the objection to hold the year, then have the substantive discussion inside it. This is also why the opening of an objection should address how the year came to be reopened at all, rather than starting with the invoices. Validity is a complete answer. The invoices answer only one adjustment.
Can I object to a reassessment while living outside Canada?
Yes. Where you live does not affect the right to object, and it does not extend the period for doing it either. The two things that go wrong are practical. Notices are served on the address on file, so a move that was never reported means the period is running while the envelope sits somewhere else, which is why you check the account rather than the post. And the documents supporting your position are often in a third country, in another language, held by an institution that will not release them quickly. Start collecting those the day the notice appears.
The reassessment says I did not report foreign income, what do I send?
Send what establishes the amount, the year it belonged to, and the foreign tax already paid on it, in that order. That normally means the foreign statement or slip, the foreign return or assessment for the corresponding period, and evidence of tax actually paid rather than withheld and later refunded. Where the two countries treat the income as arising in different years, say so explicitly and show both, because an unexplained timing difference reads as a discrepancy. If part of the adjustment is right, concede it in the same submission. A file that distinguishes what it disputes from what it accepts is read differently.
Does filing an objection stop interest and collection?
Interest is not suspended by an objection. It continues to run on the amount assessed while the dispute is outstanding, so a long argument about a large balance has a cost even if you eventually win part of it. Collection is separate machinery from both the assessment and the objection, and how it behaves while a dispute is live depends on the kind of taxpayer and the kind of tax at issue. If cash flow matters, take advice on the balance and the dispute together. Paying under protest, or paying part, is sometimes the cheaper way to run a case you expect to win.
How do you avoid double taxation?
You claim relief once, in the right country, in the right order. Usually the source country taxes first, the residence country then gives a credit for that tax against its own charge on the same income, and a treaty caps the source-country rate. Getting the order wrong is what produces a double charge you then have to unwind. The mechanism differs by income type, which is why we map the whole position before filing either return. See how to avoid double taxation.
I have not filed for several years while living abroad — what are my options?
Both countries have routes back, and using one before they contact you is what preserves the relief. On the US side there are procedures aimed at taxpayers whose failure was not wilful, including one designed for people living outside the country, and separate procedures for late account reports and information returns alone. Canada has its voluntary disclosures programme and taxpayer relief for penalties and interest. Filing quietly and hoping is the one approach with no protection attached to it. See catch-up filing.
