CRA Audit & Reassessment Assistance

CRA selects returns for review based on several factors: risk assessment algorithms that flag unusual deductions or income patterns, random sampling for quality control, inconsistencies between your filings (e.g., T4s vs. T1 income, or GST/HST vs. business income), third-party information matching (employers, banks, property transactions), industry benchmarks (if your expenses are significantly higher than similar businesses), or prior-year issues. Receiving a review letter doesn't necessarily mean you did anything wrong — it may simply be a routine verification.

Yes — it is mandatory to respond to CRA review letters within the stated deadline (typically 30 days). Failure to respond can result in: automatic reassessment where CRA denies claimed deductions or credits, issuance of arbitrary assessments based on CRA's estimates, penalties for non-compliance, potential audit escalation to a more detailed field audit, and loss of appeal rights. Even if you disagree with the request, you must respond — we can help you explain your position and provide supporting documentation.

Timing varies by audit type and complexity: Desk reviews (mail-based document requests) typically take 4-8 weeks from initial letter to resolution. Field audits (CRA agent visits your business) usually take 2-6 months including document review, on-site examination, and follow-up. Complex multi-year audits can extend to 6-12 months or longer, especially for corporations with significant transactions. GST/HST audits average 3-4 months. Timing depends on how quickly you provide documentation and the complexity of issues under review. Working with experienced representatives typically speeds up the process.

Yes, in some cases. CRA has Taxpayer Relief Provisions (formerly "Fairness Provisions") that allow cancellation or waiver of penalties and interest if: you can demonstrate reasonable cause for late filing or payment (e.g., serious illness, natural disaster, financial hardship), this is your first-time offense or you have a strong compliance history, you made an honest error despite reasonable efforts to comply, CRA provided incorrect information that led to the mistake, or extraordinary circumstances prevented compliance. We prepare and submit these relief applications with supporting documentation. However, relief is discretionary — CRA is not required to grant it, and the underlying tax balance must still be paid.

If you disagree with a CRA reassessment, you have the right to file a Notice of Objection within 90 days of the reassessment date (for individuals) or 90 days from the mailing date (for corporations). We will: review the reassessment to identify errors or unsupported adjustments, gather additional evidence to support your original position, prepare and file a formal Notice of Objection outlining your case, communicate with CRA Appeals Division to negotiate a resolution, and represent you through the entire objections process. If the objection is unsuccessful, you can further appeal to the Tax Court of Canada. It's crucial to meet the 90-day deadline — late objections are rarely accepted.

A desk audit (also called a desk review) is conducted remotely by mail or phone. CRA requests specific documents (receipts, invoices, contracts) to verify particular items on your return. You mail or upload documents, and CRA reviews them at their office. This is less intrusive and typically faster. A field audit involves a CRA auditor physically visiting your business premises to examine your books, records, and operations. Field audits are more comprehensive, cover multiple years or tax types (income tax, GST/HST, payroll), involve interviews with owners/employees, and can take several months. Field audits are typically reserved for higher-risk cases or larger dollar amounts.

A routine CRA audit or review does not directly appear on your business credit report and is not publicly disclosed. However, if the audit results in significant tax debt that goes unpaid, CRA can register liens against your business assets or property, which become public records and may affect creditworthiness. If reassessments lead to penalties or GST/HST account restrictions, this can impact business operations. Most audits are resolved without public consequence, especially when handled professionally with proper documentation and representation.

Yes — CRA audits do not prevent you from continuing normal business operations. However, you must: provide requested documents and information in a timely manner, allow CRA auditors access to your premises during business hours (for field audits), maintain accurate records going forward, continue filing all required tax returns on time, and pay any current taxes owed (even if disputing past years). In rare cases involving suspected fraud or criminal tax evasion, CRA may obtain court orders to freeze accounts or seize records, but this is uncommon for typical business audits.