Area of Law: Tax Law
Answer # 199
When does CRA investigate?Region: Ontario Answer # 199
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 four years after a tax return has been filed, although, in some cases, such as cases of suspected fraud or misrepresentation, CRA can go farther back and there is no time-limit for the re-assessment. Generally, it is recommended that people keep their records for at least six or seven years.
CRA’s reasons for investigating a tax payer
There 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 general information, contact Canada Revenue Agency.
For help filing your tax returns, contact H&R Block.
For legal advice and assistance with a CRA tax dispute, or other tax issues, contact our preferred Tax lawyers and see who’s right for you:
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