What happens if the CRA audits my Ontario tax return?

A CRA audit is a formal review of your tax return to verify that the information you reported is accurate and complete. Audits can range from a simple letter requesting supporting documents (a "desk audit" or correspondence audit) to a more intensive examination of your books and records (a "field audit"). Most CRA audits of individuals start as correspondence audits for specific items — a claimed deduction, a reported business loss, or an unusual credit.

If you are contacted for an audit, you have the right to know what is being reviewed and to provide documentation supporting your position. The CRA generally gives a timeline to respond. You can authorize a representative (accountant or tax lawyer) to communicate with the CRA on your behalf. Do not ignore an audit request — failure to respond can result in the CRA assessing based on assumptions, which are typically unfavourable.

If the audit results in additional tax owing, you will receive a Proposed Adjustment letter before any formal reassessment. You have the opportunity to respond and provide additional information at that stage. If you disagree with the final reassessment, you can file a Notice of Objection within 90 days. Audits can be stressful, but organized record-keeping and professional representation significantly improve outcomes.