I get it, tax time only comes around once a year and for most people that is the only time you look at tax documents or need to read anything from the CRA. That usually means that when you get your Notice of Assessment (NOA) in the mail it looks like a different language.
This is your guide on how to easily read and understand your CRA Notice of Assessment.
Typically a NOA is 4 pages long with the most important pages being page 2 and page 3.
Page 1- Opener
Page 1 is the opener. This page lets you know that the return has been assessed and what your refund or balance owing is.
If you have a balance owing you can also take this page into the bank and use it as your remittance voucher to pay your balance owing.
Page 2 - Summary
Page 2 shows your tax breakdown. It lists the important main categories, their line numbers, and their amounts; like your total income, deductions, net income, federal credits etc.
Below is a mockup of this summary.
By comparing the summary from the return that was filed and the summary that CRA has on the NOA you can monitor if any changes happened.
If there was a change it will be listed in the next section 'Explanation of changes and other important information'. CRA uses this section to let you know if they have made any changes to what you have filed and why.
For example, you may have forgotten to include a T4 slip so CRA automatically added it onto the tax return for you. Or you may have had tuition carry forward credits you forgot to include so CRA automatically included them for you.
If you are confused as to why CRA is listing a different amount for your refund or balance owing than what you filed this is the first place I would check.
Note: If you have a previous account balance, like money owing from a prior year, CRA will either take this out of your refund and send you the difference or they will add this to your balance owing. When this happens you will see 'Previous Account Balance' at the bottom of your summary like in the example above.
If you see CR at the bottom of the summary that means you have a credit aka a refund. If you see DR that means you have a debit aka balance owing.
Page 3 - RRSP and FHSA Information
Page 3 contains the breakdown of your RRSP contribution room and deduction limit and your FHSA contribution room & deduction limit if you have opened a FHSA.
Depending on how long your summary and explanation of changes are on page 2 is this may partially be included on page 2.
RRSP Information
First, you will see the RRSP unused deduction limit at the end of the year. It is important to note that your RRSP deduction limit is NOT the same as your RRSP contribution room.
Next you will see the calculation for your new RRSP contribution amount. This amount is 18% of your earned income from that tax year. If you have a registered pension at work, aka RPP, then you will also see that those contributions are subtracted from this 18%.
Your new RRSP contribution room gets added to any unused RRSP contribution room from prior years to find your available RRSP contribution room for the year. This is the amount of money you can contribute to your RRSP in the current year.
Note: If your available RRSP contribution room is a negative amount (shown in brackets), you have no contribution room for that year. Instead you have over contributed to your RRSP and you should consult a tax professional ASAP to fix this.
FHSA Information
If you have opened a First Home Savings Account (FHSA) the next section will show the year that you opened the account along with your contribution room from the prior year and the prior year's contributions.
If you did not contribute the full $8,000 of available contribution room you will have a carry over amount of contribution room that will be added to your current year's $8,000 contribution amount.
You can see your total FHSA contribution amount at the bottom of the table under 'Your FHSA participation room for the current year'.
Page 4- More Information
The last page lists information like the number to call if you want more information about the assessment, what to do if you move, what to do if you have new information and want to change your return, how to register a formal dispute, and information on how you can pay your balance owing.
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