Reading a CRA statement of account (and finding the mistake)

A CRA statement of account is a ledger, not a bill. It lists what was assessed, what you paid and what interest accrued, in date order, for one program account, and the figure at the bottom is the running total on the day it printed. Most balances that surprise an owner are not new tax. They are a payment that landed on the wrong account or the wrong period, sitting as a credit somewhere else while interest runs where it should have gone. Read the transaction lines before you pay the total.

The fix is a transfer. What decides whether the fix worked is the date the transfer is made effective.

What the statement is a statement of

One program account. Your business number carries a program suffix — RC for corporate income tax, RT for GST/HST, RP for payroll — and each is a separate ledger with its own periods, due dates and interest. The letters guide sets out that triage. Your corporation does not have a CRA balance. It has three or four, and they are not pooled.

A credit on one does not automatically settle a debit on another. The CRA can apply one against the other, but on its own timetable rather than on the day your money arrived — so an account can run arrears for months while the same corporation holds a credit two lines down the same phone call.

The lines that make up the balance

Four kinds of entry do all the work.

• Assessments and reassessments. The tax the CRA says a period produced. A reassessment generally posts as an adjustment to the earlier figure rather than replacing it, so a twice-reassessed period carries three lines and none of them shows what is owed.
• Payments and credits. Dated when the CRA received the money, not when you sent it — a day or three for online banking, longer on paper, and the gap matters on a due date.
• Interest and penalties. Arrears interest runs at a prescribed rate the CRA resets quarterly, compounds daily, and starts at the balance-due date, not the statement. It is charged periodically, so it lands as a line covering a stretch of days rather than ticking up visibly.
• Transfers in and out. Money moved from another period or program account. A transfer nobody asked for means the CRA applied a credit somewhere you did not expect.

The printed balance carries interest accrued to the statement date and no further. Pay that exact figure three weeks later and a small balance survives — which is how an account an owner is certain they settled keeps generating statements.

Why the payment went to the wrong place

A payment to the CRA needs three things right: the business number, the program account, and the period it is for. Online banking asks for all three and makes two easy to get wrong — the payee list carries a separate entry per program, and one looks much like the next at 11pm on a due date.

Two failures account for most of it. The program is wrong: a GST/HST remittance paid against corporate income tax. Or the period is wrong: a balance for the year just ended paid against the current year, where it sits as an instalment credit while the prior year runs arrears. Both leave your money with the CRA and both leave you owing.

The awkward third is paying from the wrong taxpayer altogether — the owner’s SIN rather than the corporation’s business number. The CRA generally moves money between accounts of one taxpayer but not between two, so that version is a refund-and-repay rather than a transfer.

Moving a payment, and the date that decides everything

Ask for a transfer. Between program accounts of the same business number, or between periods of the same account, the CRA can generally move a payment on request — through My Business Account or the business enquiries line, and an accountant holding representative authorization can ask without you.

The request is not “please move the payment.” It names both accounts, both periods, the amount and the original payment date, and asks for the transfer to be effective that date. A transfer that lands with today’s date fixes the balance and leaves the interest standing, because on the CRA’s records the destination account really was unpaid all that time. Backdated to the day the money arrived, the interest computed over the interval generally comes off with it.

Reconciling the statement to your own books

Your side is three liability accounts — income tax payable, GST/HST payable, source deductions payable — each of which should agree with its own statement, and generally does not the first time anyone checks.

Work forward from the opening balance, not back from the closing one. Match every payment on the statement to a transfer in your bank ledger; the ones in your ledger with no partner on the statement went somewhere else. Then match each assessed amount to the return you filed — a debit larger than the return’s figure means a reassessment, and there is a notice for it somewhere.

Some gaps are timing, not error: a payment made on the 30th and received on the 2nd.

The statement is usually right about the CRA’s records

It is arithmetic on what the CRA has. Whether what the CRA has is right sorts into two piles.

Not yours to have prevented: a refund from one account set off against a debt on another, which looks exactly like a refund that never came · a reassessment posted from a notice that never reached you. Yours: a payment applied as the CRA read your instructions rather than as you meant them · instalments paid short · an unfiled return, where the CRA can assess a figure of its own that behaves like a genuine balance until the real return is processed.

The rarest is the one owners reach for first — an interest calculation that is simply wrong. It is the last thing to check, not the first.

An illustrative example: C$9,400 of arrears that was mostly never owed

Round numbers, December 31 year-end. A consulting corporation filing GST/HST quarterly. A statement of account for the RT program, dated November 30, shows C$9,400 owing. The owner is certain the second quarter was filed and paid.

Reading down: net tax of C$8,600 assessed for the quarter ending June 30, due July 31, with no payment against it. Three arrears-interest lines through November 30 totalling C$300. And C$500 of net tax for the quarter ending September 30, filed on time and genuinely unpaid.

The bank ledger shows a C$8,600 transfer to the CRA on July 28. Checked the same afternoon, the corporate income tax account holds a C$8,600 credit against a period that will never need it. Wrong payee.

The transfer request names both accounts, both periods, the amount and July 28. Applied that way, the second-quarter balance was paid three days early, so the C$300 of interest was computed against a debt that did not exist and generally comes off with it.

What survives is the C$500 for the third quarter, always owed and accruing interest of its own since October 31. One real error, one real balance, and a statement correct about both.

Call about how money moved, write about what was assessed

Call about how money was applied — transfers, a payment you cannot find, what a line means, what the balance is today rather than on the print date. Have the business number, the program, the period, the payment date and the amount ready; an agent cannot search for a payment you can only describe.

Disagreeing with an assessed amount is a different route. The statement is not the document you argue with. It is the consequence of a notice of assessment or reassessment, and a formal objection runs against the notice, inside a window measured from the date on it. The letters guide covers which letters start which clocks. Spending that window on the phone is the expensive version of this mistake.

If the balance is right and the cash is not there, that is a different order of operations — file anyway, then separate the trust amounts from the corporate ones.

What Cadence does

We reconcile each CRA program account to your books at year-end, and any time a statement shows something we did not expect. Holding the representative authorization, we generally see it before you do. Misapplied payments get transferred with the original date attached, and the interest that accrued in the gap goes with them. That is core CRA support, included in the year-round packages; the annual-returns-only tier covers the returns and the instalment calculations behind them. Objections, live collections files and audits are different work — we take those selectively or refer them out, and we say which at the start.