We solve serious CRA tax problems

How Long Can the CRA Audit You & How Far Back Can the CRA Audit Your Taxes?

How Far Back can CRA Audit?

The CRA is limited in how far back they can look at someone’s returns  – in most cases.

Normally,  a  CRA waudit the two or three most recent tax years.

If the CRA finds significant discrepancies in their tax audits they have the authority to go further back and audit previous years. If the CRA sees fraud or serious issues with your tax returns, there are no limits as to how far they can audit.

Offshore audits look for unreported income or assets held outside of Canada and are usually longer than a typical audit because it is more serious and there is potentially, more money for the CRA to recover.

That is why offshore audits usually encompass ten years’ worth of tax returns. So if an offshore audit was started in 2018, it usually asks for information and documentation starting in 2008.

Simple reviews where the CRA is only looking for proof of a credit typically only ask about one year.

So, how far back can CRA Audit? The answer is that there is no limit as long as they can justify their results by claiming the taxpayer is lying and / or cheating on their tax returns.

A woman preparing her taxes

Assessments and Reassessments

There are also limits as to how far back the CRA can go with respect to reassessing someone’s tax return. As mentioned above, the CRA administers assessments to promote awareness of and compliance with the laws it administers. The CRA conducts these assessments upon the completion of an audit on the taxpayer. The normal period for reassessment for Canadian income taxes is three (3) years from the date your tax return was initially assessed. For example, if you filed your 2015 income tax return on April 30, 2016, the CRA will issue an initial Notice of Assessment on June 1, 2016. This also means that the Reassessment period will last until June 1, 2019.If you file late  you may also be subject to a  penalty for filing taxes late in Canada.

However, as with audits, there are situations where the CRA can extend the Reassessment period. If the CRA believes the taxpayer has misrepresented their Tax Return due to carelessness or willful action, then the CRA can reassess the Tax Returns at any time. The CRA can do the same if it expects fraud from the taxpayer.

That said, the CRA must be able to prove fraud, neglect or wilful fraud. Simple mistakes on a taxpayer’s return do not equate to fraud. There must be more substantial errors and purposeful errors. The CRA can also reassess a taxpayer’s returns after the three (3) year period has passed if it can produce a waiver that was signed by the taxpayer.

How Long Should I keep CRA Records?

It is important to note that the year limits discussed above are different from how long you are required to retain your financial records and supporting documentation. Taxpayers are required to keep their financial documents and records for six years in case the CRA requests them. For example, you cannot destroy your 2017 tax returns or supporting documentation until 2023.

As an exception, if you filed late returns, the six-year rule applies to the date of filing, not the tax year. Documents should be maintained until the last date of appeal expires or the six-year period ends. Taxpayers should use the latest date as their guideline.

For reassurance, taxpayers should keep their original tax records, including the original tax return, invoices, receipts, cancelled cheques and anything else that supports the declarations they made in their respective tax returns.

If you are being audited or reviewed by the CRA, we can help. It is in your best interest to have a tax lawyer on your side because auditors are only after one thing, your money. Contact us today to learn more.

About the Author

pro-tip

Pro Tip

ACCESSING THE SMALL BUSINESS DEDUCTION IN YOUR BUSINESS

The Small Business Deduction gives businesses a tax deduction on the first $500,000 of income. This saves an eligible corporation around up to $50,000 in income taxes. There are a number of conditions that have to be met to be eligible for this deduction.

Sam Faris helped me with a complex cross border tax matter. This issue involved 12 years of tax returns and it was as a result from mistakes that my previous accountant did. He was able to perfectly address the issue with the CRA and to fix the returns under the voluntary disclosure program. End results; CRA accepted Sam’s work with not a single question and the returns were reassessed to my satisfaction without penalties and interest. Many thanks to Sam brilliant work.
Response from the owner:Dear Sir It was a pleasure working on your file and get you the results that you aimed to have and to your satisfaction. We have been dealing with similar cases for many years and we were confident that the results are favorable. Please feel free to contact us in the future if you do require further help.
I found Sam’s firm online and I read the excellent Google reviews about him and his team. I decided to hire him to help me navigate an issue with the CRA. Sam delivered as expected and as promised. Results were to my satisfaction and I am very happy with how the process was handled. Highly professional and extremely knowledgeable.
Response from the owner:Dear Tanya Thank you for the 5 stars Google review and your kind words. We strive to provide the best customer service and make our clients relax and calm during the process. The cases we are taking are very sensitive so providing quality work to the CRA is extremely important so just to avoid any escalation and to make sure that our package is accepted from the first round. We will remain at your disposal anytime you require our services. Sam Faris
You will notice Sam is very quick with his responses. He knows his stuff and gives solid advice. Highly efficient, would recommend.
Response from the owner:Dear Jay Thank you for the 5 stars positive review. Working with you was pleasant too. Many thanks for your business and please do feel free to contact me if you have any questions. Sam Faris
after the initial assessment I had with Sam, he proposed a strategy to dispute CRA decision. He knew up front how to approach my case as he seemed that he dealt with similar cases many times. I hired him the end results were as promised and no surprises. Sam is very trust worthy and has a high business standards. May thanks Sam.
Response from the owner:Many thanks for the positive review.
I recently turned to Faris CPA for help with my tax filing, and I must say, I'm over the moon with the results! The whole process was a breeze, saving me time and stress. What really stood out was the friendly professionalism, impressive expertise, and crystal-clear communication from Sam and his team. They made what could've been a daunting task feel like a walk in the park! If you're looking for a warm, approachable tax expert who genuinely cares about his clients, I wholeheartedly recommend Sam and the folks at Faris CPA - they're great tax consultants!
Response from the owner:Many thanks.
Working with Sam and his team was an extremely valuable experience. One of the best Tax consultants in Toronto I've ever come across.

He has a ton of experience resolving problems with the CRA and was truly a big asset to me when I had issues I needed help with.

Would highly recommend Sam and Faris CPA, thanks again for all the great work!
Response from the owner:Thank you Paul for your positive feedback and we are glad we met your expectations.
I had an amazing experience working with Faris CPA for my CRA needs. They really know the CRA processes and made everything so easy. They were super professional, always ready to answer my questions, and made sure everything was done right. I couldn't have asked for better help. Highly recommend their services for anyone dealing with the CRA! -Sara
Response from the owner:Thank you Sara for the 5 stars review.
Faris CPA absolutely fantastic tax consultant firm. Sam and his team help me with an extremely difficult tax audit by CRA. They have done an amazing job. You guys are amazing and well deserve five star.
Response from the owner:Dear Eliyas Thank you for the positive Google review and the kind words. We heave dealt with many CRA audit cases. We have delivered the best services to our clients as we are confident with our work and its quality. Please feel free to reach out us if you require our services in the future. Sam Faris
Sam Faris is number one tax advisor and consultant. I contacted a few professionals but he was the only one who was able to help me with my dispute with the CRA. Many thanks to him.
Response from the owner:Said Thank you for the kind words and the 5 stars Google review. CRA issues may get very complicated. I am glad that everything worked out perfectly with you. Feel free to reach out to us any time you require our services. Sam Faris