Audits by Canada Revenue Agency - what happens?
The Canada Revenue Agency (CRA) performs periodic audits on taxpayers - the selection criteria is secret, of course, but is presumably based on statistical sampling principles, or else some unusual trends or changes in a particular taxpayer’s filings. Sometimes, of course, audits are triggered when nothing at all has been filed.
CRA issues many guidelines and information pamphlets. Here, for your general information, is an extract from the document that CRA auditors hand out at the beginning of audits these days:
“We strive to establish a relationship based on co-operation, openness, and transparency - key factors in an efficient audit. The Canadian public and the CRA have a mutual interest in making sure our audits are conducted efficiently and concluded in a timely fashion.
Location and materials - The auditor will generally do the audit on your premises. However, in some situations, the auditor will borrow your books and records and give you a detailed receipt for the borrowed documents. It may also be necessary at times to make copies of your electronic records.
Time involved - The time and audit takes depends on the state of your accounting records and related documents, as well as the size and complexity of your business. Your co-operation will help keep this time to a minimum.
Discussing issues - During an audit, the auditor will identify issues and discuss them with you. At any time, you can also raise your concerns with the auditor.
Responding to an adjustment proposal - The auditor will discuss any proposed adjustments and explain the rationale for them. The auditor will give you a reasonable amount of time (usually 30 days) to respond to the proposal.
Before finalizing the audit, the auditor will carefully consider your explanations and respond to your questions about the findings. If issues remain unresolved, you can contact the auditor’s supervisor to discuss them further.
Notice of Assessment and Notice of Reassessment - If we have to adjust your return, the auditor will arrange to have a Notice of Assessment or Notice of Reassessment mailed to you. If the adjustment results in an increase in the amount of your refund, a payment may accompany the notice.
To get more information about our audit programs and policies, or to comment on the audit process, contact your tax services office. You can find the telephone number and location in the government section of your telephone book or by clicking on “Contact Us” on our Web site at www.cra.gc.ca.”