A Valentine from the CRA: Learning to Love your Notice of Assessment (NOA)

12 February, 2014

A Valentine from the CRA: Learning to Love your Notice of Assessment (NOA)

Valentine’s Day is fast approaching and you may be wondering what you could get for your sweetheart. Well, how about a better understanding of how the NOA from CRA affects your RRSP? Flowers and chocolates are just so predictable.

Yes, February is not only the month of love, it is also the last opportunity for you to make an RRSP contribution that can help you save big $$$ in income taxes for 2013. This year’s deadline is Monday, March 3rd, and this means you can use contributions you made in 2014 up this date (Monday March 3rd, if you’ve already forgotten) towards your taxes for either 2013 or 2014! You might decide that since you’ve already gotten your tax rate down to the lowest level possible for 2013 that you want to use those contributions towards 2014 instead of using them for the year already gone by.

Most of us hate giving more than we have to Canada Revenue Agency (CRA) for income taxes and many of us think, “If only I had known I was going to owe $1,000 more in income taxes, I would have put an extra $3,000 into my RRSPs!” So, now is the time to figure that out! (Well, not this exact moment, finish reading the blog first!)

To help you get through this time of year, it’s important to find that special note CRA gave you last year called your Notice of Assessment (NOA). It tells you a lot, but can be mysterious and hard to understand. I would strongly encourage you to become familiar, if not intimate with your NOA! Most people file it away and don’t give it a second thought. You shouldn’t do this with your loved one’s valentine, so please don’t do that with this either.

A Valentine from the CRA: Learning to Love your Notice of Assessment (NOA) At the bottom of page 1 of your NOA is a section titled, “Your 2013 RRSP Deduction Limit”—this is important! It tells you how much you can contribute in 2013 or 2014 and a whole lot more. People often make mistakes when reading the bottom section that says “You have $X (B) of unused RRSP contributions available for 2013. If this amount is more than amount (A) above, you may have to pay a tax on the excess contributions.” Pay attention to this! You do not want to end up paying a penalty by over contributing to your RRSPs.

Most people read this as a number they can add to their contribution amount, and I can understand why. These forms are not easy to understand and you barely glance at it once a year; the familiarity is just not there. But, if you have an amount in that section, you must subtract it from (A) which is Your RRSP deduction limit for 2013.

You may ask yourself well, how did that get there in the first place? Good question. The amount there acknowledges that you’ve made these contributions already you just haven’t deducted or used them yet, thus unused RRSP contributions available (for you to deduct). So, we’ve come full circle in that you or your tax preparer may decide to forgo using some of your RRSP contributions because you’ve taken your income level down to a certain level (remember the graduated tax system?) where it makes more sense to use the contributions for the next year to get a bigger bang for your buck.

Your NOA is so very important that next week I will tell about many of its other magnificent features!

Enjoy your week and remember to love your friends and family and stop ignoring your NOA.


Betty-Anne Howard
Betty-Anne Howard