The client
A self-employed Guelph borrower buying a $452,000 home at 10% down, qualifying on a two-year average of net self-employment income.
Purchase price
$452,000, Guelph
10% down, insured
Year 1 income
$8,000/mo
unaffected by any reassessment
Year 2 income, original NOA
$8,200/mo
the figure the first lender relied on
Year 2 income, CRA's current record
$10,200/mo
after CRA disallowed a claimed expense
The problem
The Notice of Assessment on file for Year 2 showed $8,200/mo — but CRA had since reassessed that return, disallowing a claimed expense and raising net income to $10,200/mo. The first lender's file still relied on the original, now-superseded NOA, treating an out-of-date document as though it were CRA's current record.
What a reassessment actually changes
- ▸CRA can reassess a filed return after the original NOA has already issued, adjusting the assessed income up or down
- ▸The original NOA does not update itself — it simply becomes superseded
- ▸A CRA Proof of Income Statement reflects CRA's own CURRENT record, whichever document produced it
Nobody disputed the reassessment itself; the client's own accountant had already accepted it. The file simply hadn't caught up to what CRA's own records now showed.
The numbers
The two-year average moved meaningfully once the correct, current figure replaced the superseded one.
| The two-year average | Amount |
|---|---|
| Purchase price | $452,000 |
| CMHC premium (3.10% at 90% LTV) | +$12,611 |
| Total insured mortgage | $419,411 |
| Two-year average | Stale NOA | CRA's current record |
|---|---|---|
| Year 1 income | $8,000/mo | $8,000/mo |
| Year 2 income | $8,200/mo | $10,200/mo |
| Two-year average | $8,100/mo | $9,100/mo |
| GDS | 41.9% | 37.3% |
| TDS | 45.0% | 40.1% |
At 45.0% TDS, the stale figure put this file over CMHC's 44% ceiling entirely; at 40.1% TDS on CRA's own current record, it clears comfortably. See the full two-year average walkthrough for how the averaging itself works.
The solution
A mortgage agent licensed under Ontario's Mortgage Brokerages, Lenders and Administrators Act would not accept a Year 2 figure the client's own accountant confirmed CRA had already superseded.
First, confirmed the reassessment with the client's accountant. CRA had disallowed a claimed expense, which raised net business income for that year — a real, documented change, not a dispute in progress.
Second, pulled a CRA Proof of Income Statement. This is CRA's own current-record document, distinct from the original NOA, and it confirmed the post-reassessment figure directly from CRA rather than secondhand.
Third, moved the file to a lender willing to requalify on the corrected average. Read alongside the full picture of how Canadian lenders actually read self-employed income, the correction was a straightforward one once the right document was in hand.
The outcome
The purchase funded insured at 37.3% GDS and 40.1% TDS, on an average that finally matched CRA's own current record rather than a document a reassessment had already superseded.
Because this file is CMHC-insured, the 40.1% TDS figure is measured against the real 44% ceiling; the stale figure's 45.0% would have failed it outright.
What to take from this file
- 01A Notice of Assessment can become out of date. A post-filing CRA reassessment supersedes it without the original document ever changing.
- 02A CRA Proof of Income Statement shows CRA's own CURRENT record. When a reassessment is in play, it is the document to pull, not the original NOA.
- 03This kind of correction can move a file either direction. Here it raised income; a reassessment can just as easily lower it, and the same document check applies.
- 04Confirm with the client's accountant before treating any NOA as final. They will know about a reassessment long before it shows up anywhere else in the file.
Sources
Every regulatory figure in this file traces to one of these primary sources. Client details and anything that varies by lender are illustrative, as flagged below.
- ▸CMHC — Purchase (Mortgage Loan Insurance) — default-insurance premium schedule by LTV band (25-year amortization).
- ▸CMHC — CMHC Home Start — minimum down payment tiers (5%/10%) and the $1.5M insured price cap.
- ▸OSFI — Minimum qualifying rate for uninsured mortgages — the minimum qualifying rate — greater of contract rate + 2% or 5.25%.
- ▸CMHC — CMHC Reviews Underwriting Criteria — GDS 39% / TDS 44% maximums and the 600 credit-score floor for insured files.
- ▸Provincial/territorial mortgage-broker legislation fetched directly (bclaws.gov.bc.ca, legisquebec.gouv.qc.ca, fcaa.gov.sk.ca, web2.gov.mb.ca, nslegislature.ca, assembly.nl.ca) plus FCNB's own site for NB and CanLII's index for PE — see notes for per-province method — provincial mortgage regulators and licence titles.
Illustrative in this file — lender-specific, not rules:
- ▸4.95% contract rate — rates move daily; not a quote.
- ▸the reassessment's own dollar figures — every reassessment's adjustment is specific to that file's own CRA review; this reflects one file's own figures, not a formula.
Authority & provenance
How this case file was built
We publish the origin, the verification method and the reviewer for every case file, so you can judge how far to trust it before you rely on it with a client.
Where it comes from
Derived from files handled by Treadstone’s fulfillment desk and from scenarios contributed by partner brokerages. Names, employers, exact amounts and dates are changed so no client or file is identifiable.
Provenance: Composite — a pattern seen repeatedly on fulfilled files, not a single transaction.
What is verified
Every regulatory figure traces to a primary source listed above and was checked against it on the date shown. The arithmetic is recomputed by machine on every rebuild.
Anything that varies by lender is labelled illustrative rather than stated as a rule.
Who reviewed it
Reviewed for Canadian regulatory accuracy before publication, and re-checked whenever a cited rule changes.
Reviewed by: Nicholas Parson, Treadstone Associates — reviews every case file before publication.
This case file is professional reference material for licensed mortgage professionals. It is not advice to a borrower, and it is not a lender commitment. Insurer rules, qualifying rates and provincial taxes change — confirm the current position with the insurer, regulator or lender before you rely on any figure here in a live file.