Should You Be Worried About a CRA Tax Audit?

Most people who pay Canada taxes try to be sure that they follow all of the tax laws and meet their obligations as best as possible. Every year they are required to file their tax returns. For those living in the Toronto area they will many times rely on a Toronto accountant to assist them with this.

There are times where individuals in any province will be chosen at random and subjected to a Canada tax audit or review. It could be it is just a random audit meaning there were no real indicators that there was something remiss with a return. Other times it may be as a result of a tip that was made to the Canada Revenue Agency that a person was cheating on their taxes. Other times it could be a third party follow-up. This is where the tax dept. has conducted an audit on a party and another individual’s name or business surfaced. Then there are some companies or individuals who have been asked by CRA to file their returns and the request has not been followed through with so a tax audit was ordered.


When a person or business has been advised that they are going to be audited it means that all of their books, records and supporting tax documents will manually be reviewed by a CRA agent. In the case of businesses this is often done at the Company’s location. Depending on the outcome of the audit it could mean that the tax year in question would be reassessed.


Some of the common areas that can trigger a reassessment of the tax return is when unverified expenses have been claimed. There are times where deductions have been claimed that the tax payer being audited is not entitled to. Then the tax agent will carefully review sources of income to ensure that all of it has been declared on the tax return. Along with this there are other areas that become a concern for review depending on the nature of the business or individual.


If a re-assessment of the taxes submitted is done, what this basically means is that the CRA are rejecting the original tax return and will adjust it according to their findings during the audit. Sometimes it concerns an area of tax law that is complex or considered controversial in the way it can be interpreted. Any business or individual has the right to appeal the findings of the audit, but there is a time limit on filing the appeal.


Ideally if you as a Torontonian have been advised that you are going to be subjected to an audit, it is wise to consult a Toronto tax accountant for assistance in preparation. If you require my assistance please fill out the contact form on the right hand side or contact me at (416) 398-1700.


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Sam Seidman, CPA, CA, LPA
629 Sheppard Avenue West
Toronto, Ontario
M3H 2S3

Telephone: (416) 398-1700
Fax: (416) 398-6226

Chartered Professional Accountant, Chartered Accountant, Licensed Public Accountant


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