A CRA audit can connect work, property, and personal reporting
London taxpayers can have tax files with several overlapping parts. A professional may operate through a corporation, earn contract income, employ staff, own a rental property, or receive investment income. A family may rent student housing, claim deductions or credits, and have bank transfers that require explanation. A health-care or service business may have payroll, contractors, expenses, GST/HST, and personal payments moving through different accounts.
When CRA starts an audit, the file needs to be organized around the question it is actually asking. The audit letter usually identifies the years under review, the tax account, the documents sought, the CRA contact, and a deadline. It may request records that seem broad, but they are generally intended to test a particular reporting position. A response that simply sends a large bundle of documents can leave the auditor to guess how the records fit the return.
Tax Help Canada helps London residents, professionals, landlords, self-employed workers, business owners, and families manage CRA audit files. We review the notice, identify the scope, collect and reconcile evidence, prepare explanations, communicate with CRA, and help assess any proposal or reassessment before deadlines create avoidable pressure.
Start by identifying the audit issue
CRA may be reviewing reported business income, GST/HST, payroll, a rental expense, an employment deduction, a personal credit, deposits in a bank account, or corporate records. The first step is to match each request in the audit letter to the relevant return line, transaction, period, and source documents.
For a professional or health-care practice, the records may include invoices, appointment or billing reports, deposits, expenses, payroll, GST/HST, corporate books, shareholder accounts, and contracts. For rental property, the file may need leases, tenant payments, repair invoices, mortgage interest, property taxes, insurance, and a timeline of property use. For a self-employed worker, it can include contracts, invoices, payment records, expense support, GST/HST returns, and a reconciliation of deposits.
This planning stage also reveals where documents are missing. A bank, former bookkeeper, employer, client, supplier, broker, or property manager may have records for the audit years. If obtaining them will take time, it is better to communicate with CRA before the deadline and show that the work is progressing.
Revenue and deposits should be reconciled transaction by transaction
CRA may compare income reported on a return with invoices, bank deposits, payment processor reports, third-party information, and GST/HST filings. A bank deposit is not necessarily taxable income, but it needs a source. It may be revenue, rent, GST/HST collected, a transfer, loan proceeds, a reimbursement, a refund, investment proceeds, or money received for another person.
We create schedules that identify and trace material deposits. Business revenue is linked to invoices, client payments, sales reports, or professional billing records. Rental income is tied to leases and payments. Transfers are matched to the other account. Loans, reimbursements, and other non-income amounts are supported by documents. This creates a path CRA can verify and helps prevent an unexplained deposit from being treated as unreported income.
Expenses should be organized with the same care. A deductible cost needs a business or income-earning purpose. Equipment, professional fees, vehicle costs, home-office expenses, travel, supplies, contractors, and costs paid from personal accounts may need further support or allocation. A schedule should show the calculation and link to the source records.
Professional corporations and personal returns must be consistent
An owner-managed corporation can create audit questions across several accounts. CRA may ask whether a cost paid by the company was personal, how a shareholder withdrawal was treated, whether payroll or dividends were reported correctly, or whether corporate sales agree with GST/HST filings. The business and owner records should tell one consistent story.
We review corporate books, bank activity, sales, GST/HST returns, payroll, shareholder loan accounts, tax slips, expense support, and personal reporting together. This does not mean every account must be included in every response. It means explanations should be considered in their full context before being submitted.
Where a taxpayer earns both employment and self-employment income, separating the two is just as important. An employment deduction can have different rules from a business expense. Contract income may create GST/HST obligations. Bank deposits and expenses should be categorized correctly so CRA can see which activity they relate to.
Rental property audits need a record of actual use
London has a substantial rental market, and CRA may ask detailed questions about rental income and expenses. A property can be rented to students, families, or other tenants; it may be personally used, vacant, improved, or sold. Those facts affect how income and costs should be reported.
We organize rent records, leases, deposits, property tax, insurance, mortgage interest, invoices, contractor descriptions, and records of personal use. Shared costs should be allocated using a reasonable method based on the property’s actual use. Repairs and renovations should be reviewed carefully because CRA may distinguish a current expense from a capital improvement.
For student housing, a tenant changeover or short vacant period does not tell the whole tax story. The surrounding records should show whether the property was available for rent, being repaired, used personally, or otherwise managed. A clear timeline helps CRA understand the claim.
Payroll and GST/HST issues can arise from the same records
CRA may use the same business records to examine income tax, GST/HST, and payroll. Sales reports and deposits can affect business revenue and GST/HST collected. Payments to workers can raise questions about payroll remittances and contractor classification. Expenses can affect both income tax deductions and input tax credits.
We consider the connected accounts before making detailed statements. Sales should reconcile to GST/HST returns. Input tax credit claims should have source documents and a business purpose. Payroll amounts should fit the books, worker records, and T4 information. If an audit reveals a real problem, understanding its impact across the accounts helps the taxpayer plan a measured response rather than reacting only after CRA issues multiple assessments.
The practical side matters too. Tax, interest, penalties, and required remittances can affect operating cash flow. Knowing the likely exposure informs discussions about evidence, proposed adjustments, payment arrangements, and any later objection.
Missing documents can often be rebuilt responsibly
An audit may cover years for which original files are incomplete. A business may have changed software, a prior bookkeeper may be unavailable, a tenant may have moved, or old receipts may have been lost. That is a problem to address, not a reason to abandon the response.
We look for alternative evidence from banks, credit cards, clients, suppliers, employers, payroll providers, brokers, property managers, emails, contracts, calendars, accounting backups, prior returns, and CRA information. These sources can support a factual reconstruction of income and expenses. The objective is accuracy based on available information, not an unsupported estimate.
For significant transactions, schedules can identify the date, amount, source, purpose, and supporting record. This lets CRA follow the explanation even when a particular original receipt cannot be found.
Keep communication with CRA clear and documented
CRA may make follow-up requests by phone, email, letter, meeting, or secure upload. Cooperation is important, but detailed factual answers should be checked against records. A quick explanation about a deposit, worker, property expense, or shareholder payment can be hard to correct if it conflicts with documents later submitted.
We help prepare written responses that identify the audit question, the facts, the calculation, and the evidence. A clear record of submissions and communications helps the file remain consistent through follow-up. When CRA asks a new question, we assess whether it relates directly to the stated audit scope or signals a connected issue that should be considered.
Review a CRA proposal before reassessment
CRA may end an audit by accepting the return, requesting further information, sending a proposal, or issuing a reassessment. A proposal sets out CRA’s intended adjustments and may provide time to submit overlooked evidence or correct an assumption before the assessment is final.
We compare CRA’s proposal with the audit records and explanations already provided. If a reassessment is issued, a notice of objection may need to be filed within a deadline. Interest, penalties, payment obligations, and collections concerns may also need immediate attention. Some issues resolve with a focused final response; others require a broader review or formal challenge.
Get a clear plan for your audit file
If CRA has contacted you about an audit in London, a confidential review can turn the request into a manageable work plan. We will examine the years and accounts involved, the records available, the business, property, or professional facts that matter, and the next deadline. From there, you can respond with a clear record that supports the reporting position.