Receiving a letter from the Canada Revenue Agency (CRA) requesting documentation or announcing an audit can be unsettling, but understanding how the process works puts you in a far stronger position. The CRA audits thousands of individual and business returns every year — some through targeted selection, others at random. Knowing what to expect, what your rights are, and how to respond can make the difference between a straightforward resolution and a prolonged, costly dispute.
Not every CRA inquiry is a full-blown field audit. The agency uses several levels of review, ranging from a simple correspondence request to an in-person examination of your entire financial life.
The most common form of CRA contact is the desk review, also called a review letter or matching review. In this scenario, a CRA officer compares your filed return against third-party data — T4 slips, T5 investment income, and information shared by employers or financial institutions. If something doesn't reconcile, they mail you a request for specific receipts or documentation to support a particular claim, such as medical expenses, charitable donations, or employment expenses on a T2200.
Desk reviews are conducted entirely through correspondence. You do not meet with an auditor in person. Responding promptly with well-organized supporting documents typically closes these files without further action.
A field audit is a formal, in-person examination conducted either at your home, your place of business, or your accountant's office. The CRA assigns a dedicated auditor who reviews your books, records, and financial statements in detail. Field audits can cover one or more taxation years and usually involve corporate returns, self-employment income, rental income, or GST/HST accounts.
The auditor will issue an opening letter specifying the period under review and the categories of records they want to examine. This process can take weeks or months, depending on the complexity of your finances and how quickly documentation is produced.
The net worth audit is the most intensive review the CRA conducts and is typically reserved for cash-heavy businesses — restaurants, contractors, tradespeople, retail — where income can be difficult to trace through conventional records. Instead of examining invoices and receipts directly, the CRA reconstructs your income indirectly by comparing your net worth (assets minus liabilities) at the beginning and end of a period. If your net worth increased by more than your declared income can explain, the difference is treated as unreported income.
Net worth audits are thorough and adversarial by nature. They often require detailed personal bank statements, mortgage documents, vehicle records, and lifestyle expense estimates. Professional representation at this stage is essential.
The CRA uses a combination of automated risk-scoring systems and human review to select files. While random selection does occur, most audits are triggered by specific red flags:
Canadian taxpayers have meaningful legal protections throughout the audit process, and it is important to exercise them.
Right to representation. You are not required to deal with a CRA auditor directly. You can authorize an accountant, tax lawyer, or other representative to act on your behalf under a signed T1013 or RC59 authorization. Having a professional manage all communications protects you from making inadvertent admissions and ensures responses are framed correctly.
Right to put questions in writing. You are entitled to ask that any requests from the auditor be made in writing, and you may respond in writing as well. This creates a clear record and prevents misunderstandings about what was asked and what was provided.
Right to object. If you disagree with a CRA reassessment, you have the right to file a formal Notice of Objection. This is a critical right that must be exercised within the proper timeframe — do not ignore a reassessment and assume the file is closed.
Regardless of the type of audit, the CRA will usually ask for some combination of the following:
Gathering these documents quickly and organizing them clearly signals to the auditor that your affairs are in order. Missing or incomplete records, on the other hand, invite broader scrutiny.
The CRA's ability to reassess your return is not unlimited. For most individual taxpayers and Canadian-controlled private corporations, the normal reassessment period is three years from the date of the original Notice of Assessment (NOA). After that window closes, the CRA cannot reopen the return unless it can establish one of the exceptions.
If the CRA determines there was a misrepresentation attributable to neglect, carelessness, or wilful default, the reassessment period extends to six years. In cases of fraud or tax evasion, there is no limitation period — the CRA can reach back indefinitely. This is why accurate filing matters far more than most taxpayers realize.
If a CRA audit results in a reassessment you believe is wrong, you have the right to object. The formal process works as follows:
Notice of Objection. You must file a Notice of Objection within 90 days of the date on the reassessment, or within one year of your filing deadline for the year in question — whichever is later. The objection goes to the CRA's Appeals Division, which is independent of the audit function. An Appeals Officer reviews the file fresh and may confirm, vary, or vacate the reassessment.
Tax Court of Canada. If the Appeals Division upholds the reassessment and you still disagree, you may appeal to the Tax Court of Canada. There are two procedures: the Informal Procedure for amounts under $25,000 in tax, and the General Procedure for larger amounts. Tax Court appeals can be complex and time-consuming; legal representation is strongly advised.
Many taxpayers attempt to respond to CRA inquiries on their own, which often leads to oversharing information, missing deadlines, or accepting reassessments they could successfully challenge. A qualified accountant or tax professional understands how auditors operate, what documentation is truly required, and where audit findings can be legitimately disputed.
The team at Swift Accounting Calgary has guided clients through desk reviews, field audits, and formal objections across a range of industries. Early, expert involvement almost always produces a better outcome than waiting until a reassessment has already landed. If you have received a CRA inquiry or want to ensure your records are audit-ready before one arrives, getting professional advice is the most practical step you can take.
A CRA audit does not have to derail your finances or your peace of mind. With the right support, most audits are manageable — even when the underlying situation is complicated. Swift Accounting works with Calgary businesses and individuals to prepare audit responses, organize documentation, and represent clients through the full objection and appeal process.
Contact Swift Accounting today to speak with an advisor about your CRA audit or review. The sooner you have professional support in your corner, the better positioned you will be.
A simple desk review can be resolved in four to eight weeks if you respond promptly with complete documentation. A field audit involving business records typically runs three to six months, though complex cases — particularly those involving multiple years or net worth assessments — can extend considerably longer. The timeline depends heavily on how quickly you produce records and whether the auditor's findings are disputed.
Yes. The CRA commonly audits two or three taxation years simultaneously, particularly in field audits and net worth reviews. If they identify issues in one year, they will often expand the scope to earlier years within the normal reassessment period. This is one reason why maintaining organized records for at least six years is strongly recommended.
Missing records are one of the most common problems taxpayers face in audits. If original receipts are unavailable, you may be able to substitute bank statements, credit card records, supplier confirmations, or sworn affidavits to corroborate your claims. The CRA is permitted to use alternative methods, including net worth calculations, to estimate income when records are incomplete. Working with a professional to reconstruct documentation and present it credibly is far better than simply conceding the audit point.
Yes. A portion of CRA audits are random selections with no specific trigger — they serve as a compliance check across the broader taxpayer population. Being audited does not mean the CRA suspects wrongdoing. However, if your return is accurate and your records are organized, a random audit is typically resolved quickly and without adjustment. The best defence against any audit, triggered or random, is clean bookkeeping and complete documentation from the start.
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