T1 Adjustments

CRA has a form, T1ADJ, for adjusting, line by line your requests for any changes to your tax return.  This form can be generated in the tax software we use, by creating an original return, taking a Snapshot, and then populating the form.  The software generates a form that ensures that every line that changed is recorded for easy cross checking with the re-assessment notice.

Heaven help you if you want to adjust two taxpayers whose adjustments rely on each other's adjustments to be processed at the same time.

You want to adjust someone's return, or let's say you want to adjust more than one person's return...and what happens on the one return affects what's eligible to be claimed on the other person's return.  Let's use an example, where because one spouse has been admitted into a care facility, you are asking for the pension split to be reversed.  This reversal results in a spousal transfer of unused credits from one spouse to the other, which is new.  So, you submit not only a cover letter with the two adjustment forms for the two taxpayers, but you also submit a Schedule 2 for spousal transfers.  And you wait. 

What happens at CRA's processing centre is that the two returns are separated and go off to two different places to be processed, not at the same time.  Let's say that the spouse who is supposed to get the credits that result from this adjustment, doesn't qualify for those credits yet, because the first spouse hasn't had their return adjusted.  The processing staff pumps out a re-assessment, ignoring the request for the spousal transfer, not checking to see if the other spouse's return has been processed yet, and your taxpayer gets an invoice to pay way more than what you said would be owing.  The clients pay, mostly because they spend all day at the care home and have no time to deal with paperwork, and don't even check to see if what you said they would owe is what was assessed.

It's only a fluke that they happen to give you back the NOA's and you check them against what you submitted, and find, to your horror that none of the spousal transfers occurred, and that the client has overpaid $2,000.

There does not appear to be a quality control assurance process at CRA to ensure that what you request to be amended is actually amended.

Moral of the story, check every re-assessment, as it seems there is no guarantees that what you requested is what was amended.