Your Advocate for CRA Audit Representation in Brampton

What Triggers a CRA Audit? – explained by Ricky Chawla

Understanding what triggers a Canada Revenue Agency (CRA) audit is the first step to staying prepared. Whether you’re self-employed, a business owner, or a salaried individual, certain red flags in your tax return or business activity can catch CRA’s attention — and that’s when being audited by CRA becomes a possibility.

Common triggers of a CRA tax audit or CRA payroll audit include:

• Large or Unusual Deductions: If your expense claims — especially under business or self-employed income — seem disproportionate to your reported income, it raises suspicion.

• Repeated Business Losses: Declaring consistent losses year-over-year may prompt a deeper look to verify if the business is legitimate or just a tax shelter.

• Unreported or Mismatched Income: If the CRA receives income slips (like T4s, T5s) that don’t match your filing, it could initiate a CRA desk audit or even a CRA field audit.

• High Cash Transactions: In industries where cash flow is high (e.g., construction, hospitality), CRA often conducts CRA lifestyle audits or net worth audits to ensure income is fully reported.

• GST/HST or Payroll Irregularities: Late filings, under-remitted payroll deductions, or GST/HST issues are major reasons behind a CRA payroll audit.

• Random Selection: Sometimes, audits are purely statistical — but even random audits follow a process that can be stressful without proper guidance.

In any case, CRA audit help from a qualified CPA ensures you handle these triggers proactively, and avoid turning a small issue into a major tax problem.