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CRA Net Worth Audit Assessments

The CRA performs net-worth assessment audits in two stages:

  • They first look at your assets and liabilities at the start and end of the tax year and determine the change in your net worth based on whether those assets and liabilities have increased or decreased; and
  • They then look at your expenditures for the same year and compare them to Statistics Canada’s expenditure standards.

The net worth assessment audit method relies on the theory that when a taxpayer has income in a year, they can either invest it or spend it. When an auditor adds up all non-deductible expenditures to the taxpayer’s net-worth and compare the net-worth at the start and the end of the tax year, an increase in net-worth can be deemed taxable income.

Using this method, CRA may assume facts that can be to the taxpayer’s disadvantage.

Faris CPA has successfully challenged this type of assessment, removing significant tax liabilities for taxpayers.

Chartered Professional Accountant in Canada, U.S. and U.K.

Case Study

A new client of ours had a net worth assessment performed on them and had received a net worth audit. The financial impact of the net worth audit was significant and would have a major impact on his life.

Our firm was selected to help him address these issues with the CRA.

Our firm performed an intensive review of the net worth audit from the CRA. It was discovered that the auditor had made many mistakes. Sam Faris met with the auditor, team leader and director from the CRA.

Based on the findings of our firm, the auditor adjusted the net worth audit to reflect our analysis and calculations.

“My life was collapsing. Involving Sam was the best decision I made. He is a life Saver. 10 stars.”

FAQS

Can I challenge a net worth audit?

The CRA can perform a net worth audit to determine what they believe your under reported income is. Challenging a net worth audit should be done by a professional who has in depth understanding in this type of audit, strong analytical skills and who has disputed this type of audit with CRA for many years in order to minimize any taxes that CRA is asking you to pay.

Testimonial

“I was assessed significant amounts by the CRA on a net-worth assessment. Thanks to Sam’s help, I was successful. My original assessment of 94K was reduced to nothing.”

E.M., Ottawa