A CRA audit letter is anxiety-inducing — but it's a manageable process if you're organized and know your rights.
Types of CRA Audits
- Desk review: CRA requests supporting documents by mail. Most common; usually resolved in 60–90 days.
- Processing review: CRA questions a specific return line.
- Field audit: A CRA auditor visits your business. Covers one or multiple tax years in detail.
- Net worth audit: CRA estimates income based on lifestyle spending vs. reported income — used when records are inadequate.
Common Audit Triggers
- Expenses disproportionate to reported income
- Business losses claimed for multiple consecutive years
- Industry expense ratios differing from sector norms
- Large RRSP contributions relative to reported income
- Third-party tip-offs
Your Rights
- Right to professional representation during the audit
- Right to know the audit scope
- Right to object to any reassessment within 90 days
Professional representation during audits consistently produces better outcomes — auditors are more likely to accept properly documented claims when working with an authorized representative.