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Investigations by Revenue Canada
192 When does Canada Revenue Agency investigate? Canada Revenue Agency may choose to audit an individual or business even if there is no apparent reason to do so. Generally, Canada Revenue Agency can only audit someone up to three years after a tax return has been filed, unless there is misrepresentation or fraud involved.
- Canada Revenue Agency's reasons for investigating a tax payerThere are four main reasons that Canada Revenue Agency chooses to investigate or audit someone. First, if there is an inconsistency in your reporting, such as not including income that an employer has reported, Canada Revenue Agency will investigate the situation and may reassess your tax return. Second, Canada Revenue Agency may target a group of businesses or individuals to audit as part of an initiative to raise levels of compliance within the group. Third, Canada Revenue Agency may be informed of non-compliance by an outside source or from another government investigation, and may choose to audit based on this lead. Fourth, Canada Revenue Agency may also audit someone who is financially linked to someone who is already being audited, for example business partners.
For additional information about Canada Revenue Agency investigations, you should consult a tax lawyer or an accountant.