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13 Mar 2025
Did you just receive a CRA tax audit notice? If so, you might be feeling anxious.The Canada Revenue Agency (CRA) reviewing your financial records can be stressful, especially if you’re unsure why you were selected. For business owners, an audit can impact cash flow, lead to reassessments, or even result in penalties. But most audits are routine, and with the right preparation, you can survive a tax audit without unnecessary trouble.Understanding why audits happen, what the CRA looks for, and how to respond can make all the difference. Whether you need tax audit help or guidance on corporate tax filing in Langley, Canada, this guide will walk you through it.
Why Might You Get Audited?
CRA doesn’t randomly select businesses for audits - there are red flags that increase the chances of being reviewed. Some common CRA audit triggers include:
Unreported income: If your reported income doesn’t match what CRA has on file, expect scrutiny.
Excessive deductions: Claiming unusually high business expenses compared to industry standards.
Cash-heavy businesses: Restaurants, salons, and other cash-driven businesses are more likely to face audits.
Frequent late filings: Missing tax filing deadlines in Canada increases your risk of being audited by the CRA.
Random selection: Sometimes, audits are just part of a routine compliance check.
Understanding what triggers an audit helps you take proactive steps to stay compliant and avoid unnecessary stress.
What to Do If You’re Selected for an Audit?
So, you’ve received an audit notice. Now what? First, don’t panic. A tax audit doesn’t automatically mean you’ve done something wrong - it just means CRA wants a closer look. Here’s what you should do:
1. Read the CRA Notice Carefully
Find out what tax years and transactions are under review.
Identify whether it’s a desk audit (done remotely) or a field audit (CRA visits your business).
2. Gather All Necessary Documents
CRA will ask for receipts, invoices, payroll records, and tax returns.
If you work with a corporate tax accountant, they should have well-organized records.
3. Stay Professional & Respond Promptly
CRA provides a deadline for submitting documents - meet it.
If you need more time, request an extension formally.
4. Only Provide What’s Requested
Don’t volunteer extra information - stick to what CRA has asked for.
Oversharing could lead to a deeper audit.
5. Work With a Professional
If the audit is complex, consider working with expert tax accountants to streamline the entire process.
While no business is 100% immune from audits, the following best practices can reduce your risk:File on time: Late submissions attract CRA’s attention, so make sure to stay updated with the tax filing deadlines.Separate personal and business expenses: Mixed finances can raise red flags.Avoid excessive deductions: Keep your claims reasonable and well-documented.Work with professionals:Tax services for businesses in Surrey ensure compliance and minimize errors.Suggest Read:How to Avoid CRA Audit?
How CJCPA Helped Businesses Survive Tax Audit
A transport company was audited by the CRA after their tax returns were filed incorrectly by a non-CPA, leading to discrepancies in reported income and expenses. The company was at risk of penalties and additional tax liabilities. We quickly conducted a detailed review, identified the miscalculations, and worked with the CRA to correct the errors. By preparing accurate financial records and ensuring compliance with tax regulations, we helped the company avoid penalties and finalize their returns within the deadline.With experience handling hundreds of such CRA audits, we help businesses address compliance issues, correct filing errors, and navigate the audit process efficiently minimizing risks and ensuring accurate tax reporting.
FAQs: Quick Answers to Scary Questions
What will trigger a CRA audit?
Discrepancies between the GST/HST you collect and remit can trigger an audit. Always ensure your filings are precise.
What income is most likely to get audited?
Failing to report all income or taking excessive deductions raises red flags. Keep clear, separate records.
What not to say during an audit?
Avoid blaming or vague language. Stick to clear, factual answers without unnecessary technical jargon.
Need Help with a CRA Audit? We’ve Got You Covered
If you're dealing with an audit or want to avoid one in the future CJCPA’s experienced team can help. Our tax accountants assist businesses with corporate tax filing in Surrey, Canada, ensuring compliance and reducing the risk of penalties.Don’t navigate an audit alone - reach out today for expert tax audit help!
