How to Respond to a CRA Letter Requesting Documents in Canada

A letter from the Canada Revenue Agency asking for receipts, invoices or other records can be stressful. It does not mean you did something wrong. The CRA reviews and audits files for many reasons, and a request for documents is often the first step.

This article explains what these requests generally look like, what to gather, how the deadline works and what to do if you need more time. Every file is different, so if the amounts are large or the letter mentions an audit of several years, speak with a lawyer or accountant.

This article covers Canadian federal tax law, which applies in every province.

What a CRA request for documents is

An audit usually starts with the auditor contacting you by mail or phone. The auditor then examines your records, either on site or at a CRA office. For a business audit, the auditor usually phones first, and you can hang up and call back to confirm who you are speaking to. A confirmation letter follows, and the auditor will normally ask for electronic records before meeting you.

The Income Tax Act lets an authorized person inspect, audit or examine books, records and property. That person may require the owner or person in charge to give all reasonable assistance and answer proper questions. A formal Requirement for documents or information under s. 231.2(1) must set out a reasonable time for compliance in the notice. It is mandatory and it has a deadline.

What to gather and send

Read the letter slowly and list exactly which years, accounts and items it asks for. For business files, the records requested often include ledgers, journals, invoices, receipts, contracts and bank statements. Send what is requested, not your entire filing cabinet.

• Keep a copy of everything you send, and note the date and the way you sent it.
• Organize records by year and by type so the auditor can follow them. If requested records are not provided or are hard to find, delays can result.
• Books and records must generally be kept for a minimum of six years, and computer-based records must be kept in an electronically readable format.
• If you have rental income, keep detailed records of income and expenses with invoices, receipts and contracts. They are not filed with the return but must be kept in case the CRA asks, and unsupported expenses may be disallowed.
• If you sold a property and claimed the principal residence exemption, be ready to show that the sale and the designation were reported on your return.

Deadlines and asking for more time

Start with the date in the letter. For a formal requirement under s. 231.2(1), the notice must state a reasonable time for compliance. The CRA gives no fixed audit length, and how long things take depends on the condition of your records, the scope of the audit, delays from missing records and consultation with other CRA staff who have particular knowledge of the issue. Good records and co-operation reduce the time.

If you cannot meet the date, do not stay silent. Contact the person named in the letter before the deadline passes, explain what is missing and why, and say when you can deliver the rest. Confirm any agreement in writing and keep a copy. How the CRA responds to a request for more time depends on your situation, so it is worth confirming with a lawyer, and it helps to send what you already have while you track down the rest.

Ignoring a request carries real consequences. If a person does not comply with an access, assistance, information or document requirement, a judge can, on a summary application by the Minister, order compliance, and refusing the order can be found to be contempt of court.

Limits, rights and getting help

Some limits exist. An auditor may enter a dwelling-house without the occupant's consent only under a warrant, which a judge may issue on proof that entry is necessary and has been or is likely to be refused. A compliance order for information or documents is not available where they are protected by solicitor-client privilege. If you think a record may be privileged, ask a lawyer before you send it.

You may choose a person to represent you and to advise you on your tax affairs, but you remain legally responsible. The Taxpayer Bill of Rights also includes courteous and fair treatment and confidentiality of your personal and financial information. It is a set of principles rather than directly enforceable rights.

After you send the records, and what to do next

The outcome of an audit can be no change, a reassessment owing more tax, or a refund. After an audit you have 30 days to agree or disagree with the auditor's written proposal. Before objecting formally, you can contact the auditor and, if that does not resolve it, the auditor's team leader. A formal notice of objection has its own statutory deadline. For an individual (other than a trust), it is the later of one year after the filing-due date and 90 days after the notice of assessment was sent.

Interest on unpaid tax runs at the prescribed rate for as long as the amount is outstanding. The auditor can also estimate any amount owing before a notice is issued, which may help limit interest.

• Note the response date and the name and phone number of the person who wrote to you.
• List every item requested and tick off each one as you find it.
• Copy your records and send them in an organized way, keeping proof of delivery.
• If you need more time, ask before the date passes and confirm in writing.
• Get advice from a lawyer or accountant if the request is broad, covers several years or raises privilege.

Frequently asked questions