CRA Audits, Compliance & Professional Representation

The Canada Revenue Agency (CRA) conducts audits and reviews to ensure individuals and businesses are meeting their tax reporting and compliance obligations under Canadian law. Receiving an audit notice can feel overwhelming; however, it is important not to panic. An audit does not automatically imply wrongdoing. In many cases, it is simply a routine review or a request for clarification.

An audit can be stressful; however, the process becomes far more manageable when addresses promptly and professionally.

First Steps

If you receive correspondence from the CRA:

  1. Contact our office immediately. Ask Sandy whether we have received a copy of the CRA letter. In many cases, we maintain relevant documentation in your file and may be able to respond quickly.
  2. If additional information is required, the envelopes previously returned to you (containing receipts, invoices, cancelled cheques, etc.) typically include the necessary supporting documentation.
  3. We will carefully review the documentation. If there are questions, concerns, or missing information, we will contact you to discuss the next steps.

Understanding the Audit Process

In many cases, the CRA focuses on a specific area of your return. The auditor’s role is to verify that the totals reported and deductions claimed are supported by appropriate documentation. We organize your records into a clear, professional format to facilitate efficient review.

In more comprehensive audits, the auditor may attempt to trace all sources of income to determine how funds were spent, saved, or invested. Your records must demonstrate that:

  • All income has been properly reported.
  • Expenses are supported by receipts.
  • Payment methods are documented (e.g., cheque number, bank reference, e-transfer confirmation, or notation of cash payment).

Possible Outcomes

If your documentation is complete and properly filed, the audit may conclude with no adjustments and no additional taxes owing. However, minor disallowances are not uncommon, as auditors are responsible for strict application of tax legislation.

At the conclusion of the audit, the auditor will provide their findings and confirm them in writing. If an amount is owing, it is often due to an overlooked item, an honest error, or a difference in interpretation of tax rules.

You will generally have at least 30 days to review the proposal and either accept or question the outcome. We will review the findings with you and determine whether additional information should be submitted or whether the proposal is reasonable.

Upon completion of the audit, all original documentation will be returned to you for your records. In accordance with CRA requirements, all supporting documents must be retained for a minimum of six years from the end of the relevant tax year, as they may be requested for future review or verification.