CRA Review or Audit Letter: What to Do and Send

Is the CRA letter a review or an audit?

A CRA review usually checks a particular claim or reported amount. An audit examines books, records, and related transactions more broadly. The letter identifies the program, tax account, period, and information the CRA wants; use those details to set the response scope (CRA: types of review; CRA: business audits).

A review can happen before or after an assessment. A review letter is not itself a notice of reassessment (CRA: types of review; CRA: audit stages).

For a Revenu Québec letter, follow its date and separate audit and objection process. The steps below cover CRA notices.

Why did the CRA select my return?

Selection does not establish that your return is wrong. Individual returns may be selected because reported amounts differ from third-party information, a claim needs support, filing history raises a question, or the return is chosen at random (CRA: review selection).

Business audits are selected through risk assessment and officer review. The CRA may compare a business with its records and other information; it may also examine related entities or personal records when relevant (CRA: business audits). The letter and auditor's request tell you what is actually at issue in your case.

How long do I have to respond, and can I get more time?

Use the date in the review letter; there is no single deadline for every CRA request. If you cannot gather the records in time, call the number on the letter before that date, explain what is missing, and ask for a new date (CRA: responding to a review).

If you do not answer a review, the CRA may decide from the information it has and change or disallow the claim (CRA: common adjustments). If records are missing during an audit, tell the auditor promptly; missing records can delay the audit (CRA: audits).

What should I send, and how should I send it?

Send clear copies of the documents the CRA requested, tied to each questioned amount. Include the letter's reference number and a short explanation showing how the records support the return (CRA: responding to a review).

Before sharing records, end any call and verify the caller through the CRA's published contacts or phone verification tool. For an individual income tax review, include a copy of any foreign-language document with an acceptable English or French translation that meets the CRA's signatory rules.

For a business, gather the filed returns, general ledger, invoices, receipts, contracts, bank statements, and reconciliations for the periods and issues named in the letter. An auditor may also request relevant personal or related-party records; a request for those records is not automatically outside the audit (CRA: business audit documents). If the request's purpose or scope is unclear, ask the auditor to identify the issue and the records needed before assembling the response.

Use the submission route on the letter. The CRA accepts scanned documents through its secure Submit documents service, and an auditor may arrange to inspect or borrow records, giving a receipt for borrowed documents. Do not email audit records to an auditor; CRA auditors cannot receive files by ordinary email (CRA: business audits). Keep the documents sent, the explanation, and the submission confirmation.

What if I do not have receipts or records?

Tell the CRA what is missing and why; do not create a replacement receipt. For a review, include a written explanation and any other proof available. The CRA says it may consider records such as cancelled cheques or bank statements to support a claim (CRA: responding to a review; CRA: review selection).

For an audit, first try to obtain copies from the bank, supplier, customer, or other party that created the record. If that fails, discuss another way to confirm the amount with the auditor or team leader (CRA: audit records). The usual retention rule is six years from the end of the last tax year the records relate to, with longer rules for some records, late returns, and open disputes (CRA: record retention).

Can someone deal with the CRA for me?

Yes. You can authorize a representative to receive information and respond, but you remain responsible for keeping records and explaining the return. A representative's work does not remove your legal record-keeping duties (CRA: authorization; CRA: audit responsibilities).

You can grant online access through your CRA personal or business account. Form AUT-01 grants offline access only. Check that the authorization covers the right account. A representative with the needed online authorization can submit documents through the CRA's secure representative service (CRA: authorization methods; CRA: responding to a review).

How many years back can the CRA review or reassess?

For individuals and corporations, the normal income tax reassessment clock runs from the original assessment, not from the end of the tax year. A partnership determination uses a different clock. Reviewing records and issuing a reassessment are different steps. The CRA generally requires records for six years, even when the normal reassessment period is shorter (CRA: record retention).

These normal periods can be extended for any income-tax taxpayer. Misrepresentation caused by neglect, carelessness or wilful default, or fraud can permit reassessment at any time. A taxpayer can waive a specified matter on Form T2029; the taxpayer, legal representative or authorized corporate officer signs it, and the CRA must receive it before the normal period ends. For certain statutory extensions, a waiver may be filed within three years after that period ends. A non-arm's-length transaction with a non-resident, or a foreign-affiliate amount, can add three years. An unfiled or incomplete T1135 combined with unreported foreign-property income can also add three years. An unreported real-property disposition can allow later reassessment; for a corporation or partnership disposition, the property must be capital property (Income Tax Act, section 152(4)). A partnership determination has its own waiver rule (CRA: partnership return guide). Check the specific tax, year, notice, and reason before treating an older period as closed.

What happens when the auditor finishes?

The auditor gives you written findings. If the auditor proposes changes, you generally have 30 days to respond before the CRA finalizes them (CRA: audit process).

Compare the proposal with the filed return and source records. Identify each amount you accept or dispute, explain the error you see, and attach the records that support your position. Discuss unresolved points with the auditor, then the team leader. If the CRA changes tax or income, it sends a notice of reassessment; a changed loss may instead produce a notice of redetermination. If there are no changes, the audit closes (CRA: business audits).

What if I disagree with the reassessment?

File a formal objection to dispute an assessed change; discussing a proposal with the auditor does not replace an objection. Include the facts, reasons, and supporting documents, and keep a separate deadline for each notice (CRA: income tax objection rights).

If a review changed your claim for lack of records, send new records as its letter instructs; the CRA can reconsider. Track the objection deadline separately (CRA: submitting information after a review).

File an income tax objection through “Register my formal dispute” in a CRA account, or mail or fax Form T400A or a signed letter to the Appeals Intake Centre. For GST/HST, use the online service or mail Form GST159. Keep proof of filing (CRA: income tax objections; CRA: GST/HST objections).

For a GST/HST objection, a specified person must describe each issue, the change sought, and the supporting facts and reasons. Check this rule if you are a listed financial institution or a larger business (CRA: GST/HST objections, paragraphs 10–12).

The income tax objection guide sets the individual and corporation rules; the partnership guide and GST/HST memorandum set those separate rules. For both income tax and GST/HST, an extension request may be made no later than one year after the objection deadline, subject to conditions (CRA: GST/HST objections, paragraph 38). Interest can continue while a disputed amount remains unpaid. A GST/HST objection does not stop collection unless the CRA postpones it or accepts satisfactory security (Excise Tax Act, section 315; CRA: GST/HST objections, paragraphs 71–72). A large corporation must state each issue and the relief sought for it, and pay 50% of the disputed amount when it objects (CRA: objection rights and collection).

Can I still use voluntary disclosure after the CRA contacts me?

A CRA contact does not always close the Voluntary Disclosures Program (VDP). The result depends on the information you disclose and CRA action already taken (CRA: VDP circular, paragraphs 16–20).

Compare the contact's issue and period with the disclosure; an audit of another issue does not settle eligibility. Relief is discretionary (CRA: VDP circular, paragraphs 17–21). Without CRA contact, see unreported income and voluntary disclosure.

How does a VDP application work, and what relief is available?

For an eligible VDP application, submit signed Form RC199 with corrected returns and supporting records, plus payment or a request for a payment arrangement for estimated tax. If a representative submits it, both you and the representative must sign. The tax itself remains payable. The omission must involve potential interest or penalties. The income tax year must be at least one year past its filing due date; a GST/HST omission can qualify when at least one reporting period is past due (CRA: VDP circular, paragraphs 10 and 24–34; CRA: GST/HST VDP memorandum; CRA: how to apply).

An application solely for a refund, relief from penalties already assessed, or a change to a tax election does not qualify under the VDP (CRA: VDP circular, paragraph 11).

These are normal relief levels under IC00-1R7. For income tax, penalty relief generally covers tax years ending within the ten calendar years before the application year; interest relief covers interest accrued during those years, even on older debt (CRA: VDP relief limits). A GST/HST wash transaction may qualify for full penalty and interest relief: for example, a seller failed to charge a registered buyer that could have recovered all the tax as an input tax credit; other conditions apply (CRA: wash transactions; CRA: GST/HST VDP). Relief is discretionary. If accepted, CRA will not refer the disclosed issue for prosecution or apply gross negligence penalties to it. CRA may still verify or audit the tax calculation (CRA: VDP circular, paragraphs 21–22 and 37).

If the CRA refuses VDP relief, a tax objection cannot challenge that decision. You can request a second CRA administrative review, which the CRA says to seek before judicial review. A Federal Court judicial review application must be filed within 30 days from the date the CRA sent the decision being challenged. An objection to the underlying tax assessment is separate (CRA: VDP circular, paragraphs 38–42).

Provide correcting records for the last six years for Canadian-source income or assets, ten for foreign-source items, and four for GST/HST. CRA may ask for older records; these periods do not extend relief limits. Disclose all known CRA tax errors and omissions, including arm's-length and non-arm's-length transactions or circumstances connected to them. CRA may deny relief if it finds omitted non-compliance (CRA: how to apply; CRA: VDP circular, paragraphs 26–31). File online, by fax, or by mail using one method. Keep the acknowledgement and effective date; CRA later sends a written relief decision (CRA: VDP circular, paragraphs 33–35 and 43).

Revenu Québec runs a separate voluntary disclosure program for obligations it administers. Its application uses Form LM-15-V; CRA acceptance does not decide a Québec application.

Example

Illustrative amounts in Canadian dollars. A self-employed person receives a CRA review letter about C$20,000 of business expenses. They gather invoices for C$18,000, bank records, and an explanation of the missing C$2,000, then send copies with the letter's reference number by its deadline. If CRA disallows C$2,000, they check the reassessment notice and objection deadline. Another record may still support the claim.

Different for you?

• No CRA contact yet about omitted income or foreign assets: see unreported income and voluntary disclosure for whether to come forward and how foreign information may surface.
• Your corporation never filed prior returns: see catching up on unfiled corporate returns.
• The reassessment includes penalties or interest: see penalties, interest, and relief for a separate relief request.
• The questioned amount is rental income or a loss: see rental income.
• The auditor asks about money transferred to an owner: see shareholder loans.
• The letter concerns Form T1135 or a foreign affiliate: see foreign property and affiliate reporting.
• The letter concerns a foreign tax credit: see foreign income on a Canadian return.
• The auditor is using personal assets and spending to reconstruct income, proposes gross negligence penalties, or examines several related entities: those issues need a fact-by-fact response; gather the audit letter, returns, ledgers, bank statements, and proposed adjustments for tax preparation help.