Ten Things That Could Trigger A CRA Audit On Your Files


According to the employees of Audit Shield, there are many reasons why a taxpayer would be subjected to a tax audit by the Canadian Revenue Agency. In general and contrary to what many believes, the audit selection done by the CRA is not random but it is according to risk assessment that the auditors conduct. A research was conducted by the CRA in order to determine which of the two methods – random audits versus targeted audits – results to higher non-compliance. The former resulted to only 12.2 per cent while the latter showed 46.7 per cent.

There are basically ten reasons that could trigger the CRA to conduct an audit on an individual or a company.

  • If there are inconsistent details found on the third party versus the files submitted by the taxpayer. The agency employs a program wherein they compare information gathered from various third parties with the filing positions submitted by the taxpayer. This risk assessment is proven to be more effective compared to any other considering that the CRA has greatly improved in this aspect.
  • If there is a question with regards to employer compliance, the CRA would be forced to conduct an audit.
  • Once the agency requests for a particular information or document, it is the taxpayer’s responsibility to provide promptly. Failure to do so could raise suspicions and might lead to an audit.
  • One could easily attract the attention of an auditor if a request is submitted to change either the income tax or the returns.
  • If there are inconsistencies with the deductions or the credits claimed, the CRA could order an audit on the taxpayer to find out the cause of the unusual change.
  • Taxpayers who are involved in tax strategies that are high risk or aggressive could be audited for this reason along.
  • Businesses under the same industry might be compared and any discrepancies could be a cause for alarm in the auditor’s part.
  • If the income on the file is lower with respect to the residents who are residing in the same area, the taxpayer could be questioned during an audit.
  • Make sure to use fair market value when it comes to rentals in the residential areas.
  • Lastly, if a referral from another department of the CRA is submitted, the taxpayer could be audited.

With these reasons, it is important to get Audit Shield in order to make sure the taxpayer is protected during tax audits.

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