A CRA letter arrived: how to read it and what to do next

Summary

A letter from the Canada Revenue Agency, the federal department that collects income tax, GST/HST (the goods and services tax, charged in some provinces as a single harmonized tax) and the tax you withhold from staff pay, isn’t one kind of thing. What you do next depends on which kind arrived, so work through four questions in one sitting.

1. Is it genuine, and where is it? Since mid-2025 the CRA posts most letters to a corporation inside My Business Account, its online portal for business owners, so log in and open its Mail section. A letter or email that isn’t sitting there may well be a fake. The CRA never asks for payment by e-transfer, gift card or cryptocurrency, and it never threatens arrest. Check a doubtful one by calling the CRA’s business enquiries line, which is listed on canada.ca under Contact the Canada Revenue Agency, rather than any number printed on the letter itself. Add an email address while you’re in there, because without one the CRA sends no notification when a letter lands.
2. Which of your accounts is it about? A two-letter code beside your business number (the nine-digit number identifying your corporation to the CRA) says which one. RC is corporate income tax, RT is GST/HST, RP is payroll. A payroll or GST/HST letter is more urgent than a corporate income tax letter about the same dollar amount.
3. Has an assessment already been issued? An assessment is the CRA’s formal calculation of what your corporation owes for a year. Once one is issued you have 90 days to file a formal dispute, counted from the date printed on the notice rather than the day you read it. A notice posted to the portal starts that clock the day it’s posted, even if you never log in.¹
4. What’s being asked for, and by when? Put the deadline printed on the letter in your calendar with a reminder a week earlier, and note the case number in the upper right corner.

Then answer in writing through the portal, quoting the case number, covering only what the letter asked for and only for the tax year it names. In our view an owner can handle a routine request for receipts alone. Hand the reply to an accountant in three situations. The first is a named auditor assigned to your file. The second is a letter about money you took out of the corporation or put into it that wasn’t salary, dividends or an expense reimbursement, known as a shareholder loan. The third is a letter about a tax year more than three years past its original notice of assessment, because a year that old is normally beyond the CRA’s reach.

What kind of letter you have

Six kinds account for nearly everything an incorporated owner receives, and the wording at the top of the letter tells you which one you have.

• Statements and reminders need no reply unless a figure on one is wrong. The two common ones are a statement of account (the running balance on an account) and an instalment reminder (a note of the tax prepayments the CRA expects from you during the year).
• Review or verification letters ask you to back up something you claimed, usually an expense or an input tax credit (e.g. the GST/HST you paid on a truck repair and later claimed back). A review is a narrow document check with a fixed scope: the CRA names what it wants, and the response is the documents that back it up.
• Requests for information ask for books, records or written answers. Despite the polite word “request”, the CRA’s own compliance policy says you’re legally required to comply.²
• Proposal letters come out of an audit, meaning a wider examination of your records run by a named CRA auditor, and they set out the changes that auditor intends to make before making them. The CRA’s own standard gives you 30 days from the date printed on the letter, plus up to 30 more if you ask. You can get less where the year is close to the point the CRA can no longer reopen it.³
• Notices of assessment and reassessment set out what the CRA says you owe for a year, and only these start the 90-day clock for a formal dispute.
• Demands to file, requirements to pay (notices telling your bank or your customers to pay the CRA instead of you) and collections letters are enforcement. The penalties for ignoring any of them get worse the longer you leave them.

Which account the letter is about

The two letters beside your business number matter more than the dollar amount does. On corporate income tax the CRA can’t garnish your bank account, meaning take money straight out of it, or register the debt as a Federal Court judgment until 90 days after the notice of assessment was sent.⁴ Registering a debt that way makes it public and lets the CRA seize property. Filing a dispute holds both protections in place until the dispute is finally decided. Payroll deductions, meaning the income tax, Canada Pension Plan contributions and Employment Insurance premiums you withhold from a paycheque, get none of that protection. The CRA can start collecting an assessed payroll amount while you’re still disputing it. GST/HST gets no automatic protection either, and although the CRA can hold off collecting a disputed GST/HST amount, it does so only if it chooses to and on its own terms.⁵

Moreover, payroll and GST/HST money your corporation withheld or collected but never sent on can be assessed against you personally as a director, which corporate income tax can’t be.⁶ So a letter assessing $40,000 of payroll deductions you withheld but never sent on deserves a faster response than one assessing $60,000 of corporate income tax.

Deadlines, and what doing nothing costs

Review letters set an administrative deadline the CRA can move, and the letter tells you to call the number at the bottom if you need longer. Under the CRA’s internal guidelines, an audit request gets extended for something outside your control (e.g. illness, a death or a natural disaster) rather than for being busy.³

Statutory deadlines are different, because the officer who wrote to you has no power to move them. A corporation gets 90 days from the day a notice of assessment was sent to file a notice of objection, the document that starts a formal dispute.⁷ Miss it and the 90 days can still be extended, but only on a formal application to the CRA’s Chief of Appeals within the year that follows.⁸

Ignoring a review letter gets the expense or credit you claimed disallowed, and the year reassessed, meaning the CRA recalculates what you owe for it. Ignoring a request for information lets the CRA assume facts, assess on those assumptions, and ask your bank or your suppliers instead. Silence can also cost $25 for every day you don’t answer, with a minimum of $100 and a maximum of $2,500 (100 days) for each request you leave unanswered.⁹ Ignoring a demand to file is the expensive one. A first offence runs at 5% of the unpaid tax, plus 1% of that same unpaid tax for each full month the return is late, to 12 months. Those rates double to 10% plus 2% a month, for up to 20 months, if the CRA formally demanded the return and you were already charged a late-filing penalty in any of the three previous years.¹⁰

Answering the letter

Send your answer in writing through My Business Account, using its Submit documents service and quoting the case number, because a written response is dated, routed to the right file and confirmed. Answer the question asked, for the period asked about, and nothing further. Replying to a two-line query about vehicle expenses by sending your whole set of accounting records for the year feels cooperative. The practical result is that a one-issue review picks up two more.

Where a document no longer exists, say so in writing and offer other proof of the same expense (e.g. a bank statement showing the payment, or a duplicate invoice from the supplier). You have to keep books and records for six years from the end of the tax year they relate to.¹¹ Whether to pay an assessed amount while you dispute it is a separate decision, and a bigger one.

How often this changes

Two things here have a short shelf life. The CRA’s response standards for audit requests are administrative, so they can change without any change in the law. Bill C-31 would add a daily penalty for not answering a CRA information request. The bill passed second reading on June 3, 2026 and now sits with a House committee, so the penalty isn’t law as at August 2026 and we aren’t quoting an amount until it is. What doesn’t move is how far back a letter can reach. The CRA can normally reassess a year for three years from the date the original notice of assessment was sent, and that window covers a Canadian-controlled private corporation, which most owner-managed companies are. Other corporations get four years.¹² If a letter reaches back further, flag it, because reopening a closed year takes a specific reason such as misrepresentation.

Closing thoughts

Most CRA letters an owner-manager receives are narrow, answerable, and close without any change to the return. What turns one into a real problem is rarely the substance of the question. Rather, it’s the two weeks before anybody opens the letter, or the 90 days that run out while everyone waits politely for the CRA reviewer to reply.

How we handle it

With authorization on your CRA account, portal mail gets read when it’s posted rather than when someone thinks to look. Routine correspondence, verification reviews, requests for information and reassessment support are part of our CRA Support service. We work out which account and which deadline a letter engages, draft the response and file it with the documents attached. Active major audits, formal objections, collections files and voluntary disclosures (coming forward about income you never declared or returns you never filed) we take on selectively or refer out. We’ll say which one yours is once we’ve read the letter.