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CRA Tax Audit Assistance

At Taxpage, we are proud to be tax audit specialists in Toronto and across Canada.

We work with individuals and businesses in various industries to navigate the complexities and nuances involved in receiving tax audits and understanding CRA audit triggers.

If you’ve received a CRA audit letter, our tax lawyers are here to help. Get in touch with Rotfleisch & Samulovitch P.C. for a consultation today.

Contact us at 647-699-4535 or use the contact form.

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Tax Audit Specialists in Canada

A tax audit can be an overwhelming and potentially expensive experience. A CRA tax auditor will ask to see books and records and bank account statements, and there may be questionnaires to be filled out. Any information entered incorrectly, even if due to an error, will be used against the taxpayer.

As experienced Toronto tax lawyers, we have the knowledge and resources necessary to navigate the CRA tax audit process.

CRA Audit Process

What happens when you are audited?

Typically, you will first receive a notice from CRA of their intention to audit. The notice will usually outline the preliminary information that they require from you. In some cases, you may be provided with a detailed audit questionnaire. The auditor may then follow up and request more information. The beginning of an audit is the best time to obtain legal representation. Auditors are not always reasonable and may not listen to your reasoning for filing your returns the way you did. Our experienced Toronto tax lawyers will speak to the auditors on your behalf and begin the necessary legal work it takes to resolve all issues relating to your return.

If you disagree with the outcome of an audit, it is especially crucial to obtain representation as soon as you have been reassessed by CRA. You have appeal rights, but you only have 90 days to appeal by filing a Notice of Objection. As experienced tax lawyers in Toronto, we can provide detailed assistance in filing your objection.

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CRA Tax Audits

There are over 350,000 audit and review actions conducted by the Canada Revenue Agency on a yearly basis. Around 15,000 of these audits deal with “cash only” businesses (i.e. the underground economy). Additionally, an estimated 35,000 are tax shelter audits.

CRA may choose to audit a taxpayer for several reasons. Here are just a few:

  • Random selection
  • Third-party tips
  • Comparison of reported income to other taxpayers in your neighbourhood
  • Focused audits such as home renovators or restaurants or crypto traders
  • Comparison of information on returns to information received from third-party sources or
  • Past history of non-compliance

The Canadian income tax system is based on “self-assessment.” This means that it is up to every taxpayer to properly report their annual income on their return. The CRA performs tax audits to ensure the “self-assessment” system continues to work properly. While most Canadians are truthful on their returns, there are some who are not. Some taxpayers also make genuine errors when preparing their returns.

Most CRA audits are done to ensure compliance with the Income Tax Act or the Excise Tax Act for GST/HST. An audit is an examination of a taxpayer’s returns and supporting records, including bank accounts and receipts, to ensure that income and expenses have been properly reported and supported by accounting records.

Here are a few examples of issues that may arise in a CRA audit that would cause a taxpayer to be reassessed at the end of an audit:

  • Overstated Expenses
  • Overstated Deductions
  • Overstated Credits
  • Underreported or unreported Earnings
  • Unreported offshore income
  • Unreported offshore assets
  • Credits, such as for charitable donations or medical expenses, that are not supported by receipts
  • Failure to report “gig” income such as from Fiverr or Uber

Be sure you have complete records detailing every expense and deduction you have claimed on your return!

Tax Appeal Assistance

If CRA has informed you of an impending income tax audit, or you have unfavourable audit results, trust an income tax audit expert in Canada to help you through the process.

We offer tax solutions to individuals and businesses across Canada. At Taxpage, you’ll find experienced tax lawyers in Edmonton, Toronto, Mississauga, Brampton, Hamilton, London, Montreal, Ottawa, Calgary, Vancouver, and Winnipeg.

Contact us today to set up an initial consultation. Our top Canadian tax law firm is your one-stop assistance centre and can assist both during the audit process and once the CRA audit is complete. The CRA is not on your side, but our tax lawyers are!

Case Studies

We were retained by Don, who runs a number of businesses near Kingston, Ontario and had various issues. One of his corporations was being audited for HST. His accountant was not able to represent him properly. We took over the audit file. We dealt with his bookkeeper to provide the records needed by the auditor and satisfied all of the auditor’s questions. All of the imputed credits (deductions) which were supported by receipts were allowed.

Z is based in Toronto and is in the business of purchasing cars for export. A GST/HST audit led to holds being placed on Input Tax Credit refunds of over $600,000, which the client relied upon for operating capital. We were referred by his accountant and retained when the accountant was unable to make any progress. We made detailed submissions to the auditor supporting the refunds and demanded a release of the withheld funds. After escalating to the auditor’s team leader, we were successful in achieving rolling monthly refunds for the remainder of the audit. By the conclusion of the audit, we had been successful in protecting the client’s cash flows and achieving a complete refund of the Input Tax Credits.

Dennis is retired and worked in finance. He lives in Newmarket, Ontario and in the Caribbean and has complex issues related to overseas holding corporations and assets. He retained our Toronto tax law firm to assist him with his CRA tax audit. The main audit issue was that the overseas bank accounts, assets and all supporting documentation were held in the corporation’s name. Our Toronto income tax lawyers reviewed the records and then instructed the accountant to provide all of the relevant books and records to the CRA auditor and supplied bare trust documents. Our Canadian tax lawyers provided a detailed explanation and rationale regarding Canadian income tax law and the bare trust concept, and its treatment for income tax purposes, which resulted in a complete acceptance of Dennis’s original filing position.

Find Tax Audit Assistance in Toronto

Taxpage is your trusted resource for tax audit specialists in Canada. With over 30 years of experience, we help individuals and businesses understand what triggers an audit from the CRA and what they can do to find relief.

We understand the complexities and nuances involved in receiving a CRA audit letter and can help clients navigate the process with ease and efficiency.

Trust Taxpage to provide trusted CRA audit solutions in Canada.


Frequently Asked Questions About CRA Tax Audits

A CRA audit is an examination of your tax or GST/HST filings by the Canada Revenue Agency to verify that your income and deductions are fully and properly reported and supported. Under our self-assessment tax system, Canadian taxpayers are required to submit regular returns to the CRA. A tax audit is when a CRA auditor examines a Canadian taxpayer’s return in more detail.

The Canada Revenue Agency uses various criteria to determine who will be subject to a CRA audit. Anyone who has been reported by any third party will be audited, as will anyone whose name was released in an international leak such as the Panama Papers. People who work in certain sectors of the economy that aren’t known to be parts of the underground cash economy, such as construction, restaurants, and hospitality, have a higher risk of being selected for an audit.

You cannot stop a CRA audit once you have been selected for an audit. All you can do is hire a professional to represent you and make sure that your rights are fully protected. If you fail to cooperate with the auditor, a court application will be brought by CRA to force your compliance.

You will be contacted by a CRA auditor who may ask you to send in information, fill out a questionnaire, or arrange for an in-person meeting. The auditor will ask for documentation to support the expenses claimed and will typically also ask for copies of bank statements to verify income and deposits.

The biggest single mistake is to deal directly with the auditor instead of through a professional such as a Canadian tax lawyer or tax accountant. The CRA auditor will take notes of every statement made and will sometimes accidentally or deliberately get the information wrong. Failure to fully cooperate with the auditor and to provide all information requested, again through a professional, is also a common estate.

Normally, the CRA can audit a personal return for the previous three years and a corporate return for the previous four years. This is called the normal reassessment period. However, if CRA alleges gross negligence or fraud, there is no time limit on how many years back they can go to carry out an audit of a Canadian taxpayer. However, the onus is on CRA to prove gross negligence or fraud. Our experienced Toronto tax lawyers frequently challenge a CRA audit outside of the normal reassessment period by proving that CRA has not met its onus.

The most important thing to do when audited by a CRA auditor is to not deal directly with the auditor but to retain a professional Canadian tax lawyer or tax accountant. It is also very important during the course of the CRA audit to provide all relevant information and documentation to your tax professional. If you have done something wrong, such as not reporting income or claiming improper expenses, it is essential that you retain a Canadian tax lawyer immediately and let them know exactly what you have done improperly to help prevent tax fraud charges.

A CRA collections officer has the ability to seize bank accounts, which effectively freezes them, without a court order. The collections officer can also garnish wages and put liens on the property. In order for a collections officer to take action, an assessment has to have been issued. Once an assessment is issued, a Canadian taxpayer has the ability to retain a Canadian tax lawyer to file a notice of objection, which will suspend all collection action.

An audit is different from a tax investigation. The purpose of a CRA audit is to determine if the returns filed are substantially correct. If an auditor comes across evidence of possible tax evasion, the file must be referred to an investigator, and the Canadian taxpayer has full rights under the Canadian charter of rights. The result of an investigation can be prosecuted, and as a result of a successful prosecution by CRA, jail time is possible.

While a CRA audit normally only goes back three years, the auditor has the ability, in certain circumstances, to go back longer than that. A lack of records to support an audit can be a problem for the taxpayer. Therefore it is usually a good idea to keep records for a minimum of eight years and ideally for 10 years.

CRA will accept financial records in both hard copies and electronic formats; however they will still insist on obtaining original records. If original records are not available, then alternatives may be acceptable. Usually, a professional such as a Canadian tax lawyer will be required to intervene to persuade the CRA auditor to accept other forms of audit evidence.

You can absolutely face imprisonment for cheating on taxes. Taxpayers can and do go to jail for cheating on their taxes. Tax fraud is an offence that will result in penalties of up to 200% of the taxes evaded and sometimes jail time as well. The possible penalties for tax evasion include up to 14 years in prison. The penalties for being convicted are serious, and you should absolutely engage a Canadian tax lawyer if you are ever accused of evasion.

The best way to fight an audit is to hire a top Toronto tax lawyer immediately. Every step of the audit will then be scrutinized by a Canadian tax lawyer, and the CRA auditor will be monitored. If the auditor issues an adverse assessment, it can be appealed by way of having a Canadian tax lawyer file a notice of objection. If that notice of objection is also unsuccessful, then an appeal can be instituted to the Tax Court of Canada.

How long the CRA spends on an audit varies considerably with the workload of its auditors and the complexity of a given case. A complex audit can take many months and even more than a year. If your financial records are well-organized and you respond quickly to the CRA, the audit process can go much faster. A qualified Canadian tax lawyer can help guide you through the audit process and ensure that it is resolved as quickly as possible.

If you’ve received a CRA audit letter, you need an audit specialist from Taxpage.

We’re a trusted resource for corporate and personal income tax lawyers in Ontario and across Canada. We specialize in a wide range of tax solutions, including voluntary disclosure, tax consulting, CRA garnishments, and tax audit assistance.

Whether you’re looking for tax pipeline planning resources or you’ve received an audit from the CRA, we can help.

Contact us today for a free consultation and learn how you can easily navigate your income tax audit.


Pro Tax Tip

Tax Audits in Ontario

There are over 350,000 tax audit and review actions conducted by the Canada Revenue Agency on a yearly basis. Around 15,000 of these tax audits deal with “cash only” businesses (i.e. the underground economy). Additionally, an estimated 35,000 are tax shelter audits.

Get your CRA tax issue solved

Address: Rotfleisch & Samulovitch P.C.
2822 Danforth Avenue Toronto, Ontario M4C 1M1