What to Do After Receiving a CRA Audit Letter
Getting a CRA audit letter can feel like stepping into a minefield but with the right guidance from a Toronto tax lawyer, it doesn’t have to blow up your finances or peace of mind.
At Kirshen Tax Law, we help individuals and businesses across Canada respond strategically to CRA audits. Whether it’s a GST/HST review, income verification, or a full-blown field audit, your next move matters.
Here’s how to take control the moment that audit letter lands in your mailbox.
What to Do when You Receive a CRA Audit Letter
Step 1: Take the Letter Seriously
That letter is more than a routine request. It may hint at unreported income, ineligible expenses, or even signal that CRA believes you’ve been non-compliant. Common types of audits include:
- Desk audits: Document-based, limited to specific issues;
- Field audits: On-site, comprehensive investigations; or
- Trust audits: Often tied to payroll, GST/HST, or source deductions.
Don’t ignore it or assume it’s a misunderstanding. Time is not on your side.
Step 2: Understand What They Want
Every audit letter includes:
- The taxation year(s) under review;
- The issue(s) or line items under scrutiny;
- A deadline for submitting records or explanations; and
- Instructions for how to respond.
Read it twice. The CRA’s language is often vague, strategic ambiguity is a tool they use. You’ll need to read between the lines to assess the true scope.
Step 3: Pause Before Sending Anything
Many taxpayers panic and send a flood of documents without thinking through the implications. This is risky. The CRA is not just looking for proof, they’re looking for patterns, inconsistencies, and red flags.
Before responding:
- Review your returns for the targeted years;
- Compare what you claimed with what CRA is asking for; and
- Gather clean, well-organized support, nothing more, nothing less.
Step 4: Bring in a Tax Lawyer Early
Most people wait until after CRA issues a reassessment or proposes penalties. By that point, you’re reacting, not controlling the narrative.
Engaging a tax lawyer upfront allows you to:
- Manage communication through legal representation;
- Prevent over-disclosure or damaging statements; and
- Establish a defensible position from day one with help from a Toronto tax lawyer who knows how to deal with CRA tactics.
At Kirshen Tax Law, we regularly handle audit negotiations, prepare formal responses, and push back where CRA positions are weak or unfair.
Step 5: Protect Your Rights
You have rights under the Taxpayer Bill of Rights, including:
- Timely and accurate information;
- Representation by a professional;
- A fair and impartial review; and
- The right to object or appeal.
If CRA overreaches, misinterprets your records, or applies the law too aggressively, we’ll challenge them head-on.
Step 6: Know What Comes Next
Once CRA reviews your materials, you may receive:
- A no-change letter, meaning the audit ends without reassessment;
- A proposal letter, outlining adjustments and giving you a chance to respond; or
- A notice of reassessment, which you can formally object to within 90 days.
You can often resolve issues at the audit or proposal stage before it escalates. That’s where strategic legal guidance makes the difference.
Kirshen Tax Law Can Help
You don’t need to navigate this alone. At Kirshen Tax Law, we work directly with CRA auditors, appeals officers, and the Department of Justice to protect taxpayers’ rights and we do it every day.
Whether it’s an income tax issue, GST/HST audit, or payroll review, we’re here to help you push back and protect what matters.
If you’ve received a CRA audit letter, call us today to book a free consultation with an experienced Toronto tax lawyer who can help you navigate the audit process, protect your rights, and limit your exposure.
Jeff Kirshen BA, JD (CA), JD (US)
Tax Lawyer | Founder, Kirshen Tax Law
Disclaimer
The content on this website, including articles and blog posts, is provided for general informational purposes only. It reflects the laws and regulations as of the date of publication, which may have since changed. This content is not intended to serve as legal advice and should not be relied upon as such. Tax laws and situations can be complex and unique to each individual. The information provided may not apply to your specific circumstances. For personalized advice regarding your tax or legal matters, we recommend consulting a qualified lawyer.