Definition:
A Notice of Assessment (NOA) is an official statement issued by the Canada Revenue Agency (CRA) after they process your tax return. It outlines the details of your tax filing, including whether you owe additional taxes, are entitled to a refund, or if there are any discrepancies in your return. It also provides information about your tax situation for the year, including your total income, taxable deductions, and credits.

Why the NOA is important

The NOA is a crucial document for both personal and financial planning. It confirms that your taxes have been assessed and gives you an official record of your tax obligations or refund. It’s particularly important for:

• Tax filing confirmation: The NOA is proof that your tax return has been processed and finalized.
• Financial verification: Lenders often request an NOA to verify income and assess your financial stability when applying for loans, mortgages, or credit.
• Tax adjustments: If there were any errors in your tax return, the NOA will explain any adjustments made by the CRA, including changes to deductions or credits.

Key details included in an NOA

A typical NOA will include several important pieces of information:

• Income details: The NOA outlines your total income and any adjustments to your taxable income.
• Refund or balance due: It shows whether you’re due for a refund or if you owe additional taxes.
• Taxable deductions and credits: The NOA will list the deductions and credits you’ve claimed and show how they affect your tax obligations.
• Carry-forward amounts: If you have unused credits or losses that can be carried forward to future years, they will be noted on the NOA.
• RRSP contribution room: The NOA will also detail any unused RRSP contribution room for the year.

How to read your NOA

While the NOA can be a bit technical, understanding it is essential for staying on top of your taxes and financial situation. Key sections to review include:

• Line 150: This is the total income reported on your tax return.
• Taxable income: This is the amount of income subject to taxation after deductions.
• Refund or balance due: If applicable, this section shows if you’re owed money or need to pay additional taxes.
• RRSP contribution limit: This tells you how much you can contribute to your RRSP for the next year.

The role of the NOA in obtaining a mortgage

When applying for a mortgage, lenders often request a recent NOA as part of the verification process. The NOA helps lenders:

• Verify income: It provides an official record of your income, which is important for assessing your ability to repay the loan.
• Confirm tax compliance: Lenders use the NOA to check whether you are up-to-date with your taxes, which can impact your mortgage application.
• Assess financial stability: The NOA gives lenders a snapshot of your overall financial health, helping them make an informed decision about your mortgage eligibility.

How to obtain your NOA

You will automatically receive an NOA from the CRA once they process your tax return. It’s typically sent by mail or available online if you’re signed up for CRA’s online services. If you don’t receive your NOA or need a copy, you can:

• Check your CRA account online: You can log into your CRA My Account to view and download your NOA.
• Request a copy: If you didn’t receive it or misplaced it, you can request a copy from the CRA directly.

What to do if there are discrepancies

If you notice any discrepancies or errors in your NOA, you can:

• Review your tax return: Check if the figures on your NOA match the information on your filed tax return.
• Contact the CRA: If you believe there is a mistake, you can contact the CRA to discuss the issue and request a reassessment if necessary.
• Seek professional help: If you’re unsure about how to proceed, a tax professional or accountant can assist with resolving any issues.

Keeping your NOA for future use

It’s important to keep a copy of your NOA for future reference. Not only is it a record of your tax filing, but it’s also a valuable document when applying for loans, mortgages, or if the CRA ever audits your return. It’s recommended to keep a copy of the NOA for at least six years.expert can help you understand your options and plan the best way forward. They can help you evaluate refinancing options, explore debt reduction strategies, and find solutions to navigate the challenges of negative equity.

Last modified: November 11, 2024