CRA Tax Audit

What is a tax audit?

As explained on the CRA web site, auditing is a way for the Canada Revenue Agency to monitor and inspect GST/HST and income tax returns, excise taxes and duties, and payroll records. Although there is a high standard of compliance with the law in Canada, audits help maintain public confidence in the fairness and integrity of Canada’s tax system.

Why is a tax audit performed?

Canada’s tax system is based on self-assessment, which means that individuals are responsible for accurately completing and filing their tax returns on time. The Canada Revenue Agency (CRA) provides Canadians with the information they need to meet their income tax obligations. The Canada Revenue Agency maintains that in such a system – where Canadians voluntarily follow the tax laws – it can only be achieved via a “vigilant and continuous inspection of returns.” Without the threat of the Canadian government auditing the tax filings, this system would be rendered ineffective.

How does the CRA select files for audits?

The CRA’s risk-assessment system selects files to audit based on a number of conditions. The most common ways of selecting files are the following: computer-generated lists, audit projects, leads and secondary files.

For additional information on the audit program and policies, you can visit the Business audits section of the Canada Revenue Agency’s website.

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