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How CRA Selects Files to Audit

Auditing is a way for CRA to monitor and inspect GST-HST and income tax returns, excise taxes and duties, and payroll records. Although there is a high standard of compliance with the law in Canada, audits help CRA maintain public confidence in the fairness and integrity of Canada's tax system.

The tax return is recorded in a computer system that enables CRA to select returns to be audited. The system also allows sorting returns into various groups to help with selection. In some cases, CRA compare selected financial information for current and previous years of taxpayers engaged in similar businesses or occupations. From computer-generated lists of returns for potential audit, CRA then choose specific returns.

There are four common ways of selecting files:

Computer-generated lists: Most returns are selected for audit review from computer-generated lists. For example, the computer system can compare selected financial information of clients engaged in similar business or occupations and generate lists of returns with audit potential. From these lists CRA choose specific returns to be audited.

Audit projects: In some cases, CRA test the compliance of a particular group of clients. If the test results indicate that there is significant non compliance within the group, it may audit its members on a local, regional, or national basis.

Leads: Leads include information from other audits or investigations, as well as information from outside sources.

Secondary files: Sometimes CRA select files for audit because of their association with other previously selected files. For example, if you are in a partnership with another taxpayer, and that person's file has been selected for audit, it is usually more convenient to examine all the records at the same time.

For more information on how CRA selects files to audit, see the CRA guide or contact us Meade Accounting & Taxation at 905-669-1918 by phone, through our website or in person at our offices 601 Edgeley Blvd., Unit 4 Woodbridge Ontario in Vaughan. We are located in the GTA north of Toronto east of Brampton and Mississauga south of Caledon, Bolton, Nobleton, Markham, Aurora & Newmarket. We are favorably located and able to provide our services to Toronto and GTA individuals and businesses.  Meade Accounting & Taxation is committed to providing our clients with reliable and dependable tax preparation services, including personal and business & corporate income tax preparation services, accounting, bookkeeping and consulting services.

The information in this article and on this site is not intended to be a substitute for professional advice.  Each person's situation differs; we encourage you to seek a professional advisor who can assist you in using the information on this web site to your best advantage

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