Generally, if CRA expands the scope of an audit it means the auditor has found additional areas of concern during the audit process. Under the Income Tax Act and the Excise Tax Act, the CRA has broad authority to request additional records and documents, expand the review to additional tax years, accounts or entities, and conduct audits that examine business relationships and transactions. To get help, ask a lawyer now.

Triggers for CRA expanding the scope of an audit:

1. Findings: if the CRA finds errors, discrepancies, unusual patterns or non-compliance in the documents under review, it may conduct further review of related areas.
2. Linked activity: if the CRA finds connections to other individuals, business or financial accounts that may be connected to discrepancies or other forms of non-compliance, a broader audit may occur.
3. Significant errors or omissions: if the CRA finds significant errors or omissions, they may decide to investigate other tax years or related persons or business. Examples of a significant error or omission include significant income not reported, incorrect deductions or credits, and so on.

Taxpayer’s rights under an audit

Taxpayers have the right to clear communication, which means receiving an explanation as to the purpose of an audit or expansion of an audit and the reason why additional information is needed. Taxpayers are also entitled to reasonable time extensions to provide the requested documents, and also have the right to challenge the CRA’s decisions through objections or appeals.

Get help

For advice and assistance with tax planning, a CRA tax dispute, or other tax issues, contact KPK Law.

Personal and business tax issues are vast and complicated. To get help, ask a lawyer now.

								
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