What to Do If You Make a Mistake on Your Tax Return in Canada
It’s always a satisfying moment when you hit the send button and EFILE your Canadian income tax – unless it’s one of those times that you realize afterward that you’ve made a mistake and shouldn’t have hit the button quite so quickly.
You’ve found some more receipts or used the wrong class when you were figuring your Capital Cost Allowance, for instance. Or, if you’re filing a T1 return, used the wrong dates for your medical deductions.
If you make a mistake on your tax return, don’t panic! The Canada Revenue Agency (CRA) is not going to rush out to your home and take you into tax custody. Instead, they have a procedure for you to follow so you can change your tax return after filing and fix the mistake you’ve made.
To Change Your Tax Return After Filing
Wait for your Notice of Assessment to arrive. There’s nothing you can do until it has. Once you’ve received the Notice, you’ll be able to request changes to your return in a variety of ways.
Choose your method and make your request for changes.
How to Make a Request to Change Your T1
If you are requesting a change to a T1 income tax return, you can do it online or by mail in one of these three ways:
- Use the change my return option found in My Account, one of the CRA’s secure online services. Canada Revenue Agency Online Accounts for Businesses explains in detail how to sign up for My Account.
- Send a completed T1 Adjustment Request form (T1-ADJ) to your tax center, or
- Send a signed letter to your tax center asking for an adjustment to your return.
If you are requesting a change via mail, you need to be sure your letter and/or form includes all the supporting documents related to the change(s) you are requesting, including those from your original income tax assessment (unless you’ve already sent them in to the Canada Revenue Agency) as well as:
- the details of your request, including the years of the tax, returns to be changed;
- your social insurance number;
- your address; and
- a phone number where you can be reached during the day.
Online or by mail, you can request a change to any return for the previous nine years as well as requesting a change to your tax return for the current year.
If you are asking for changes to be made to tax returns for different years, you need to prepare separate forms and/or letters for each change and send the change requests for each year in separately.
Once the Canada Revenue Agency has reviewed your request for a change to your T1 Canadian income tax form, they will let you know whether they’re going to allow the change or not by sending you a notice of reassessment showing the changes they have made to your income tax return or a letter explaining why they didn’t make the changes you requested.
How Long Will You Wait?
Two weeks if you’ve requested a change online or within eight weeks if you’ve requested a change by mail, according to the CRA website.
They also caution that it might take longer than that for your request to be processed if they need to contact you for more information or documentation or if you send in your request to make a change to your income tax return in spring or early summer.
Making a Request to Change Your T2
As is the case with the T1 return, you can't change your T2 tax return after filing until your corporation receives the Notice of Assessment.
Once that's happened, requests to make changes to Canadian corporate income tax returns can also be made electronically or by mail.
You can make your request for a reassessment electronically by using commercial Canadian tax software or by sending your amended T2 income tax return in barcode format to the Canada Revenue Agency.
Or you can write a letter and mail it to the appropriate tax center. Make sure your letter includes:
- the name of the corporation;
- the corporation's business number (BN);
- the corporation's tax year; and
- any details that apply, including revised financial statements and revised schedules.
If the change you want to make involves asking to carry back a loss or tax credit to a previous tax year, you will need to file whichever of the following schedules apply:
- Schedule 4, Corporation Loss Continuity and Application, to ask to carry back a loss;
- Schedule 21, Federal and Provincial or Territorial Foreign Income Tax Credits and Federal Logging Tax Credit, to ask to carry back foreign tax credits on business income;
- Schedule 31, Investment Tax Credit – Corporations, to ask to carry back an investment tax credit; and
- Schedule 42, Calculation of Unused Part I Tax Credit, to ask to carry back a Part I tax credit.
How Far Back Can You Go?
That depends on what type of corporation you have and what kind of reassessment is being asked for.
The Canada Revenue Agency’s (CRA’s) normal reassessment period for a corporate (T2) return is within three years of the date they mailed the original notice of assessment for the tax year if the corporation was a Canadian-controlled private corporation (CCPC) at the end of the tax year or within four years of the date they mailed the original notice of assessment for the tax year if the corporation wasn’t a CCPC. But extensions are possible.
What Happens Then?
Once the CRA has received your request for reassessment of your corporate income tax return, they’ll review your request and, once their review is completed, send you a notice of reassessment showing the changes they have made to your income tax return or a letter explaining why they didn’t make the changes you requested.
How Long Will You Wait?
It's hard to say how long the process will take; the CRA does not post any specific timelines for reassessments of corporate T2 tax returns. The time frame for reassessment will depend on the type of reassessment that you’re requesting, whether your request needs more review or the CRA needs to contact you or your authorized representative for more information or documentation and whether you’ve sent your request in late summer or fall which lengthens the process.