How to Handle a CRA Tax Audit: What Every Canadian Needs to Know

How to Handle a CRA Tax Audit: What Every Canadian Needs to Know

February 6, 2025

Receiving a tax audit notice from the CRA can be stressful. Knowing what to expect and how to prepare can make the process smoother and less intimidating.

1. Why Audits Happen The CRA may audit you for various reasons:

Discrepancies in your tax return

High deductions

Random selection

2. What to Do When You Receive an Audit Notice

Stay calm and read the letter carefully

Gather all relevant documents

Contact a tax professional for guidance

3. Preparing for the Audit

Organize your receipts, tax slips, and financial records

Provide accurate information

Communicate openly with the CRA

4. Common Audit Red Flags

Unreported Income

Large Business Expense Claims

Repeated Losses

5. During the Audit Cooperate fully and respond promptly. Providing incomplete or incorrect information can extend the audit process.

6. After the Audit Review the CRA’s findings and seek professional advice before agreeing to reassessments. You have the right to appeal if you disagree.

7. Protecting Yourself in the Future

Keep thorough records

File accurate returns

Seek professional assistance when in doubt

A CRA audit doesn’t have to be overwhelming. Being prepared and seeking professional support can help you resolve the audit efficiently and avoid future issues.