What to Do If CRA Audits You 2025

Updated March 2025 • bremo.io

Receiving a letter from the Canada Revenue Agency requesting information about your tax return can be stressful — but it is important to stay calm. Most CRA reviews are routine, and many are resolved simply by providing requested documents. Understanding the process helps you respond effectively and protect your rights.

Types of CRA Reviews and Audits

1. Review (Matching Review)

CRA compares information on your return against T4, T5, T3, and other information slips it receives from employers, banks, and brokers. If there is a discrepancy, you will receive a letter requesting clarification or additional documents. This is the most common and least serious type of contact.

2. Desk Audit (Correspondence Audit)

CRA selects specific claims on your return for verification — often large or unusual deductions. You will receive a letter listing what is being reviewed and requesting documentation. Everything is handled by mail or phone; you do not meet with a CRA auditor.

3. Field Audit

A CRA auditor visits your home or business to review records in person. Field audits are more comprehensive and typically apply to businesses, self-employed individuals, or taxpayers with complex affairs. They can take weeks or months to complete.

4. Net Worth Audit

If CRA suspects unreported income (e.g., cash businesses), they may conduct a net worth assessment — comparing your assets and lifestyle to reported income. The burden of proof shifts: CRA estimates your income based on your net worth change, and you must disprove it.

Your Rights During a CRA Audit

• The right to be treated professionally and courteously
• The right to privacy — CRA must follow the Privacy Act
• The right to representation — you can authorize an accountant, tax lawyer, or anyone else to represent you
• The right to object to a CRA assessment within 90 days of the Notice of Assessment
• The right to receive a decision in a reasonable time
• The right to appeal to the Tax Court of Canada if you disagree with CRA's objection decision

How to Respond to a CRA Letter

1. Read carefully: Identify exactly what is being requested and the deadline for response (usually 30 days).
2. Gather documentation: Collect receipts, bank statements, contracts, or other records supporting the items CRA is questioning.
3. Respond on time: Missing a deadline can result in automatic adjustments against you. If you need more time, contact CRA before the deadline and request an extension.
4. Provide organized documentation: Include a cover letter referencing CRA's letter and clearly label each document. Do not send originals — keep copies.
5. Consider professional help: For anything beyond a simple document request, consult a CPA or tax lawyer.

What CRA Commonly Audits

Filing a Notice of Objection

If CRA reassesses your return and you disagree, you can file a Notice of Objection within 90 days of the mailing date on the Notice of Assessment (or Reassessment). Filing an objection suspends collection action on the disputed amount during the review.

Use Form T400A or file online through CRA My Account. Clearly state what you disagree with, the amount in dispute, and the facts and reasons supporting your position.

Statute of Limitations

CRA generally has 3 years from the date of the original assessment to reassess your return (4 years for personal trusts, indefinitely for fraud). Keep all tax records for at least 6 years to ensure you can respond to any CRA request.

When to Hire Professional Help

• Any field audit — professional representation is strongly recommended
• Net worth audits — these require expert handling
• If the amounts at stake exceed $5,000–$100
• If CRA is suggesting penalties or gross negligence charges
• Before filing a Notice of Objection