Arbitrary Assessments by CRA

I have a client who was arbitrarily assessed by CRA for 2016, 2017, 2018 and 2019. CRA assessed him based on the slips he had on file. The client now wants me to adjust these years to include things like medical expenses, donations, tuition, ontario provincial credits etc. I was lead to believe that in cases where the returns were arbitrarily assessed that instead of doing T1 Adjustments the taxpayer was required to submit the entire tax return for each year where changes were being requested. Is this correct and if so where is the reference supporting that?

I’ve generally just filed an original return for years that have been Arbed. An Arb is NOT treated as a return by CRA generally except for the purpose of collections. (ie if you look on RAC, it doesn’t list any detail usually, nor does it show as “filed”. Or at least it didn’t for the last one I checked on.)

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Interestingly, CRA is now calling them “factual assessments”. I used the “arbitrary return” term to a CRA person recently and they actually sounded offended.

Hilarious. They’ve been known internally and externally as Arbitrary Assessments since the early 1970s when I worked there.

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In the past, I’ve been directed by CRA to mail complete paper returns in order to update the arbitrary assessments.

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Arbitrary assessments I’ve seen in the past usually were very high fictitious amounts to shock the taxpayer into producing missing returns. I’ve always dealt with them with a T1 adjustment for the reason - new information following arbitrary assessment - without any problem for the last 48 years.

My practice has always been to file the actual tax return to replace the arb’d return. I believe I’ve been instructed by CRA more than once to follow this practice. I agree that they’re usually issued with unusually high income. This gets the collections department involved. The client calls their accountant shortly after getting their first call from collections.