### What You Need to Know About CRA Audits

The **Canada Revenue Agency (CRA)** performs audits to ensure taxpayers are following tax laws and receiving any refunds or benefits they are entitled to. These audits are crucial for maintaining a fair and trustworthy tax system in Canada.

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### **How Are Audits Selected?**

The CRA does not choose files for audits randomly. Instead, they rely on a **risk assessment process** to target files most likely to involve issues or errors. Factors influencing this selection include:
– Errors or discrepancies detected in tax returns.
– Signs of non-compliance.
– Comparisons with similar files or reviews of past audits.
– Information gathered from other investigations.

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### **Steps in the CRA Audit Process**

#### **1. Initial Contact**
The CRA begins the process by reaching out via mail or phone to arrange the audit. The location depends on your situation—it could happen at your residence, business, or a CRA office.

#### **2. Document Examination**
An auditor will request documentation such as tax returns, business ledgers, receipts, contracts, and sometimes personal banking records, if they are relevant. Records of family members or related businesses may also come under scrutiny if necessary.

#### **3. Sharing Your Records**
You can submit the required documents through secure CRA online channels. However, email is not allowed as it is not considered secure.

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### **What Happens During an Audit?**

– **Scope of Review**: The auditor’s goal is to ensure your records are accurate and compliant with tax laws.
– **Auditor Findings**: The outcome may vary:
– If everything is accurate, no changes will be made.
– If adjustments are required, you’ll receive a proposal letter outlining those changes. You’ll have 30 days to respond with explanations or additional documentation, if needed.
– **Final Decision**: You’ll receive a final letter summarizing the results, which could involve no changes, extra taxes owed, or even a refund.

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### **Your Rights and Responsibilities**

#### **Your Rights**
As a taxpayer, you are protected under the *Taxpayer Bill of Rights*. This ensures the CRA interacts with you professionally, fairly, and respectfully. Your privacy and access to your personal data are guaranteed by the *Privacy Act*.

#### **Your Responsibilities**
– Keep organized records for at least **six years**, including electronic files, if applicable.
– Provide all requested documents and explanations promptly to avoid delays.

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### **How Long Does an Audit Take?**

The duration of an audit depends on various factors, such as:
– The completeness of your records.
– The complexity of the audit.
– How quickly you provide requested information.
– Whether consultations with CRA specialists are needed.

Being well-organized and responsive can significantly shorten the process.

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### **What If You Disagree with the CRA’s Assessment?**

If you aren’t satisfied with the audit results, there are steps you can take:
1. **Discuss with the Auditor**: Contact the auditor or their team leader to attempt a resolution.
2. **File an Appeal**: If no agreement is reached, you can formally appeal the CRA’s reassessment.

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### **Conclusion**

CRA audits are vital for ensuring fairness and compliance within Canada’s tax system. By maintaining accurate and organized records and promptly fulfilling requests, you can make the audit process smoother. Additionally, understanding your rights and responsibilities as a taxpayer is key to staying prepared.

For expert guidance, it’s always recommended to work with professionals. Companies like **JHG Corporate and Tax Services Inc.** have some of the best tax experts in the field to help you maximize your tax returns and ensure compliance with your obligations.

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*This information is based on CRA’s “What You Should Know About Audits” (RC4188). Always consult a professional tax service for accurate and reliable assistance.*