While Canadians had an extended time this year to file their income tax returns for the 2019 tax year, the extended filing deadlines (June 1 for the majority of Canadians, and June 15 for self-employed individuals and their spouses) have passed and returns should be filed.
In most cases, the taxpayer files a return and then waits for a Notice of Assessment from the Canada Revenue Agency (CRA) letting them know whether the tax authorities are in agreement with the taxpayer’s information on his or her tax situation. And, in most of those cases the CRA will issue a Notice of Assessment indicating that the return is “assessed as filed”, meaning that the CRA does agree with the information filed and tax result obtained by the taxpayer. While that’s the outcome everyone is hoping for, it’s a result which can go “off the rails” in any number of ways.
By the third week of June 2020, over 27 million individual income tax returns for the 2019 tax year had been filed with the CRA. And, inevitably, some of those returns contain errors or omissions that must be corrected — in 2019 the CRA received about 2 million requests for adjustment(s) to an already filed return.
Just over 90% of the returns which have already been filed for the 2019 tax year were filed through online filing methods, meaning that they were prepared using tax return preparation software. The use of such software significantly reduces the chance of making a clerical or arithmetic error, like entering an amount on the wrong line or adding a column of figures incorrectly. However, no matter how good the software, it can work only with the information that is provided to it. Sometimes taxpayers prepare and file a return, only to later receive a tax information slip that should have been included on that return. It’s also easy to make an inputting error when transposing figures from an information slip (a T4 from one’s employer, for instance) into the software, such that $49,505 in income becomes $45,905. Whatever the cause, where the figures input are incorrect or information is missing, those errors or omissions will be reflected in the final (incorrect) result produced by the software.
When the error or omission is discovered in a return which has already been filed, the question which immediately arises is how to make things right. The first impulse of many taxpayers is to file another return, in which the complete and correct information is provided, but that’s not the right answer. There are, however, several ways in which a mistake or omission on an already filed tax return can be corrected, including online options.
A few years ago the CRA introduced a new service called ReFILE, which allows taxpayers who filed their returns online (whether through NETFILE or EFILE) to advise the CRA electronically of an error or omission made in an already-filed return. The ReFILE service, which can be found at https://www.canada.ca/en/revenue-agency/services/e-services/e-services-businesses/refile-online-t1-adjustments-efile-service-providers.html, allows taxpayers to make such corrections online, on the CRA website.
Essentially, a taxpayer is able to file a correction to an already-filed return, using the same tax return preparation software that was used to prepare the return. Whether the return was filed using NETFILE or EFILE, adjustments for returns can be filed used ReFILE for any of the 2016, 2017, 2018, or 2019 taxation years.
There are limits to the ReFILE service. The online system will accept a maximum of 9 adjustments to a single return, and ReFILE cannot be used to make changes to personal information, like the taxpayer’s address or direct deposit details. There are also some types of tax matters which cannot be handled through ReFILE, like applying for a disability tax credit or child and family benefits.
It’s also possible to make a change or correction to a return using the CRA’s “My Account” service (through the “Change My Return” feature), but that choice is available only to taxpayers who have already registered for My Account. As well, the changes/corrections which can be made using ReFILE are the same as those which can be done through My Account, without the need to become registered for My Account, a process which takes a few weeks.
Taxpayers who wish to make changes or corrections which cannot be made through ReFILE or My Account (or those who just don’t wish to use the online option) can paper-file an adjustment to their return. The paper form to be used is Form T1-ADJ E, which can be found on the CRA website at https://www.canada.ca/content/dam/cra-arc/formspubs/pbg/t1-adj/t1-adj-08-18e.pdf. Those who are unable to print the form off the website can order a copy to be sent to them by mail by calling the CRA’s individual income tax enquiries line at 1-800-959-8281. There is no limit to the number of changes or corrections which can be made using Form T1-ADJ E.
The use of the actual T1-ADJ E form isn’t mandatory — it’s also possible to file an adjustment request by sending a letter to the CRA — but using the prescribed form has two benefits. First, it makes clear to the CRA that an adjustment is being requested, and second, filling out the form will ensure that the CRA is provided with all the information needed to process the requested adjustment. And, whether the request is made using the T1 Adjustment form or by letter, it is necessary to include any relevant documents — the information slip summarizing the income not reported, or the receipt for an expense inadvertently not claimed.
Hard copy of a T1-ADJ E (or a letter) is filed by sending the completed document to the appropriate Tax Center, which is the one with which the tax return was originally filed. A listing of Tax Centres, and their addresses, can be found on the CRA website at https://www.canada.ca/en/revenue-agency/corporate/contact-information/tax-centres.html. A taxpayer who isn’t sure any more which Tax Centre his or her return was filed with can go to https://www.canada.ca/en/revenue-agency/corporate/contact-information/tax-services-offices-tax-centres.html on the CRA website and select his or her location from the listing found there. The address for the correct Tax Centre will then be provided. Similar information is also provided on page 2 of the T1ADJ form.
Where a taxpayer discovers an error or omission in a return already filed, the impulse is to correct that mistake as soon as possible. However, no matter which method is used to make the correction — ReFILE, My Account, or the filing of a T1-ADJ in hard copy, it is necessary to wait until the Notice of Assessment for the return already filed is received. Corrections to a return submitted prior to the time that return is assessed simply can’t be processed by the CRA.
Once the Notice of Assessment is received, and an adjustment request is made, it will take at least a few weeks, usually longer, before the CRA responds. The Agency’s usual estimate is that such requests which are submitted online have a turnaround time of about two weeks, while those which come in by mail take about eight weeks. However, the CRA has indicated, in a notice posted on its website, that it is experiencing “significant” delays this year in the processing of both paper-filed T1 tax returns and paper-filed T1 ADJ E requests. The notice did not indicate how long this delay might last.
Sometimes the CRA will contact the taxpayer, even before a return is assessed, to request further information, clarification, or documentation of deductions or credits claimed (for example, receipts documenting medical expenses claimed, or child care costs). Whatever the nature of the request, the best course of action is to respond promptly, and to provide the requested documents or information. The CRA can assess only on the basis of the information with which it is provided, and it is the taxpayer’s responsibility to provide support for any deduction or credit claims made. Where a request for information or supporting documentation for a claimed deduction or credit is ignored by the taxpayer, the assessment will proceed on the basis that such support does not exist. Providing the requested information or supporting documentation can usually resolve the question to the CRA’s satisfaction, and its assessment of the taxpayer’s return can then be completed.