CRA Review vs. CRA Audit: What's the Difference?

Why CRA examines returns

CRA's system is based on self-assessment. You report your own income and claims, and CRA checks a portion of returns after they're filed to confirm they're accurate. Being selected doesn't mean you did anything wrong. Files can be chosen because of specific claims, comparisons with similar taxpayers, information from third parties, refund claims or simple random selection.

What a CRA review usually looks like

A review generally focuses on one or a few specific items on a return. Common examples include:

• A request for receipts supporting a particular deduction or credit
• A GST/HST review of input tax credits or a refund claim
• A processing review shortly after a return is filed
• A matching review where CRA compares your return with slips or third-party information

Reviews are typically handled by letter or online. CRA tells you what it wants to see and by when. If the documents support the amount claimed, the review is usually closed without changes. If not, CRA may propose an adjustment.

What a CRA audit usually looks like

An audit is a more thorough examination of your books and records. It may cover:

• Several items or the entire return
• More than one tax year
• More than one type of tax, such as income tax, GST/HST and payroll
• Related parties, such as shareholders or associated companies

Audits are typically run by an assigned auditor and may involve an initial interview, requests for general ledgers and source documents, and sometimes a visit to your premises. They generally take longer than reviews, often months.

Side-by-side

These are general patterns. The exact process depends on the type of tax and the issues involved.

How the process usually ends

For both reviews and audits, if CRA thinks changes are needed, it generally explains its position before reassessing. In an audit, this often comes as a proposal letter with a period to respond. That's your opportunity to provide more information or explain why you disagree, and it's often the best time to resolve issues.

If CRA then issues a notice of reassessment you disagree with, you can file a formal notice of objection, generally within 90 days of the date of the notice. If the objection doesn't resolve it, further appeal options exist.

How to respond to either

• Confirm the contact is legitimate using your CRA online account or official canada.ca contact numbers.
• Note every deadline and ask for an extension before it passes if you need one.
• Provide what is requested, organized and clearly labelled.
• Keep copies of everything you send.
• Stay factual. If you don't know an answer, say you'll confirm it.
• Consider representation. An accountant can manage communication with CRA and help keep the scope focused.

For first steps after any CRA letter, see What to Do When CRA Contacts Your Business.

Reducing the stress next time

The best protection is good records kept throughout the year. Organized bookkeeping, saved receipts and documented decisions make reviews quick and audits far less disruptive.

Common questions

This article is general information only and is not tax or legal advice for your specific situation. Refer to the Canada Revenue Agency for current guidance.