A CRA audit is a formal review of tax returns and records, ranging from automated slip matching to multi-year field audits. Office audits typically take 3 to 9 months; field audits can take 6 months to over 2 years. Each reassessment that results carries a 90-day objection window. CRA can request records up to 6 years past the end of the tax year.
A CRA audit is a formal review of a taxpayer’s books, records, and tax returns to verify that the right amount of tax has been reported and paid. Audits range from a single-letter request for receipts to multi-year on-site reviews of a corporation’s complete records. The most common audits are matching reviews (T4, T5, donation, medical), pre- and post-assessment reviews, and full audits of business returns (T1 self-employed, T2 corporate, GST/HST). The CRA must assess within the normal three-year reassessment period for individuals; longer for corporations and unlimited if misrepresentation is established.
Five types of CRA review
Type
Trigger
Typical duration
Slip matching review
CRA’s automated system matches T-slips to your return; mismatches trigger a letter.
4-8 weeks
Pre-assessment review
Before issuing the original notice of assessment, CRA asks for support for specific deductions or credits.
30-90 days
Post-assessment review
Same questions but after the assessment, often July to December.
30-90 days
Office audit
CRA reviews specific issues by mail or phone; typical for medium-complexity items like business expenses or rental income.
3-9 months
Field audit
An auditor attends the business premises and reviews complete records. Most common for corporations and high-revenue sole proprietors.
6 months to 2+ years
What triggers an audit
Statistical anomalies versus industry norms (e.g., gross profit margin far below comparable businesses, large round-number deductions).
Repeated losses on a side business or rental property.
Cash-intensive industries (restaurants, construction, personal services).
Large or unusual one-time deductions or credits.
Tax shelter participation (e.g., certain donation arrangements).
Information from third parties (T-slips, tip lines, FINTRAC reports, foreign exchange of information).
Random selection within a CRA risk-assessment program.
Industry-wide projects (e.g., real estate flips, gig economy, crypto).
How an audit unfolds
Initial letter. CRA sends a letter identifying the tax years, types of tax, and items under review. The letter sets a response deadline (usually 30 days) and lists the documents required.
Document gathering. The taxpayer collects books, records, bank statements, contracts, and receipts. CRA can require records up to six years past the end of the tax year (longer for non-residents and certain transactions).
Auditor review. The auditor analyses the records, often spending several weeks. Follow-up information requests are typical.
Proposal letter. Before issuing reassessments, CRA sends a proposal letter listing intended adjustments and the reasons. The taxpayer has 30 days (extendable) to respond.
Notice of reassessment. CRA issues formal reassessments for each affected tax year. Each one starts a 90-day objection clock.
Optional dispute. Notice of Objection within 90 days; appeal to Tax Court of Canada within 90 days of CRA’s appeals decision.
What auditors usually look at
Tax type
Common focus
T1 individual
Employment expenses, medical, donation, child care, business and rental income, capital gains on real estate
T1 self-employed
Gross revenue completeness, vehicle log, home office percentage, meals and entertainment, capital cost allowance
T2 corporate
Shareholder loans, related-party transactions, source of dividends, capital gains, scientific research and experimental development claims
GST/HST
Input tax credit eligibility, rate applied, place of supply, registration date
Worked example: post-assessment review of medical expenses
A taxpayer claims $8,200 of medical expenses on her 2024 return. In September 2025, CRA sends a post-assessment review letter requesting receipts. The taxpayer has 30 days to respond.
Day 0: Receive letter. Collect prescription records, dental statements, optometrist receipts, parking and travel logs.
Day 25: Mail response with 47 receipts and a summary table mapping each to the medical expense rules under section 118.2.
Month 4: CRA processes response. Disallows $1,200 of receipts that fall outside the 12-month window. Adjusts return.
Month 5: Notice of reassessment increases tax by $180. Taxpayer accepts and pays.
Records you must keep
Record type
Retention period
Personal tax records (T-slips, receipts)
6 years from the end of the tax year
Business records (sales, expenses, books)
6 years from the end of the tax year
Capital property records (purchase, ACB, improvements)
6 years from the end of the tax year in which the property was disposed of
Trust records
6 years from the end of the trust’s tax year
Tax shelter or RRSP-related records
Permanent
Practical tips
Respond to CRA letters on time. Missed deadlines often lead to disallowed claims by default.
Keep responses factual. Volunteer only what is requested; do not provide unrelated tax years unless asked.
If the audit expands to other years or topics, ask CRA to issue a written request specifying the new scope.
Use the proposal letter window. Before reassessments are issued, the taxpayer can negotiate, provide additional documents, or accept proposed changes.
Consider professional representation for full audits of business returns. Cost-benefit favours representation when proposed adjustments exceed $20,000.
Common triggers include slip mismatches, large or unusual deductions, repeated business losses, cash-intensive industries, third-party information, tax shelter participation, and random selection within risk-assessment programs.
How long does a CRA audit take?
Pre-assessment and post-assessment reviews typically take 30 to 90 days. Office audits run 3 to 9 months. Field audits range from 6 months to over 2 years for complex corporate files.
How far back can CRA audit?
Three years from the original notice of assessment for individuals and most CCPCs, four years for non-CCPC corporations, six years for foreign-related items, and unlimited time when misrepresentation due to neglect, carelessness, wilful default, or fraud is established.
Do I need a lawyer or accountant for a CRA audit?
Not for simple slip-matching letters or post-assessment reviews. Professional representation is often justified for full audits of business returns, especially when proposed adjustments exceed about $20,000.
What is a proposal letter?
A pre-reassessment letter from the auditor listing intended adjustments and reasons. The taxpayer has 30 days (extendable) to respond before the formal reassessment is issued.
How long do I have to keep records for CRA?
Six years from the end of the tax year. Longer for capital property records (6 years from disposal year) and certain tax shelter records.
Can I refuse a CRA audit request?
No. CRA has broad statutory powers to require records under section 231.1 of the Income Tax Act. Refusal can result in compliance orders and penalties. Specific privileged communications (e.g., legal advice) may be protected; consult a lawyer for privilege issues.