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Getting a CRA audit notice can feel overwhelming, but it doesn’t have to be. This guide walks Canadian business owners through exactly how to prepare, from understanding the type of audit to pulling the right records, reconciling receipts, and managing communication. Learn what documents the CRA wants, how to organize your systems, and how expert help can reduce stress and protect your business.
Understand the scope
Before you panic, know what CRA is asking for.
Is it a desk audit (they request specific docs) or a field audit (they come on-site) which is more comprehensive?
Always ask for clarification in writing so you know exactly what’s being reviewed.
Pull only the records the CRA asks for
CRA can typically audit the past 3-4 years.
Depending on what the audit relates to, be ready to have your invoices, receipts, contracts, payroll records, and GST/HST returns handy.
Keep digital copies with clear filenames (Ex: “2024-05 Meals Receipt.pdf”)
Tie everything back to the books
It’s not enough to have receipts. CRA will want to see:
- Receipts - matched to transactions
- Bank deposits - matched to sales
- Expenses - reasonable for your business
Build a reconciliation file that connects each receipt to your GL entries.
Prep explanations for “grey” areas
Meals, vehicle expenses, home office, subcontractors - these are high-audit items.
Be ready with:
- A mileage log for vehicle claims
- A home office square footage calculation
- Written agreements for contractors
Show clean systems
A messy audit = longer audit.
Use tools like Xero/QBO + Dext to demonstrate strong record-keeping.
CRA auditors take note if your system is organized; it shows credibility.
Communicate smartly
Never overshare. Only provide what’s asked for.
Keep copies of everything you send.
Have one point of contact (ideally your accountant) managing communications.
Partner with experts
Audits can drag for months without proper guidance.
Work with accountants who:
- Pre-review your files
- Handle CRA questions
- Defend grey areas with tax law references
- Can set up your accounting/bookkeeping system to be audit-proof
A CRA audit notice in your inbox can feel like the worst kind of surprise.
These audits don’t have to be stressful if you know how to prepare.
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