Why is CRA Auditing My Business?

Most corporate returns are e-filed with CRA, and starting January 1, 2013, almost all corporate tax returns will be required to be e-filed with CRA.   Electronic transmission gives them easy access to analyze your financial data.    Don’t be surprised if you get a corporate tax audit if:

  1. You’ve had a bad year and carry back your tax losses to a year when you had taxable income.
  2. Some of your expenses are much higher than last year.
  3. Your financial ratios are very different to industry averages for your type of business.
  4. You’ve had another audit such as a payroll or HST audit that didn’t go well.
  5. You’re in an industry that CRA is currently focusing on.
  6. You’ve recently let go of a disgruntled employee or business partner. They are often a source of information for CRA.