A CRA audit needs a clear explanation of the facts
Pembroke taxpayers may receive a CRA audit letter involving contract work, a small business, property, rental income, GST/HST, payroll, equipment, personal banking, or a tax claim. The records may be spread across bank accounts, invoices, receipts, property files, contracts, and an old accounting system. The audit becomes manageable when those records are organized around the specific issue CRA is testing.
CRA’s notice normally identifies the years under review, account, requested documents, contact person, and deadline. It may concern income, expenses, GST/HST, payroll, property use, rental activity, or deposits. The response should not be a rushed collection of documents. It should explain how the reported figures were calculated and which records support them.
Tax Help Canada helps Pembroke residents, contractors, landlords, business owners, property owners, and families manage CRA audit files. We review the scope, organize evidence, prepare reconciliations and explanations, communicate with CRA, and help assess a proposal or reassessment before deadlines create added pressure.
Identify the CRA issue before replying
CRA may request invoices, statements, receipts, contracts, GST/HST returns, payroll reports, property records, or written explanations. A review of deposits may test reported income. A property request may concern rental use, repairs, or a capital improvement. A worker-payment request may concern payroll or contractor classification.
For a contractor, records can include contracts, invoices, client payments, vehicles, equipment, expenses, and GST/HST. For a rental property, they may include leases, deposits, financing, taxes, insurance, repairs, and personal-use records. For a business, they can include sales, customer payments, payroll, expenses, bank records, and GST/HST returns. This planning identifies missing documents early enough to request them from banks, suppliers, clients, employers, property managers, or former bookkeepers.
Reconcile income, deposits, and GST/HST
CRA may compare income reported on a return with invoices, deposits, payment reports, GST/HST, and third-party information. A deposit can be revenue, rent, tax collected, a transfer, a loan, reimbursement, refund, or money received for another person. Material amounts should have an evidence-based source.
We prepare schedules linking sales to invoices or reports, rental income to leases, and transfers to matching account movements. Loans, reimbursements, refunds, fees, and other non-income amounts are supported by records. This gives CRA a practical way to verify the explanation and reduces the risk that a non-income deposit is treated as unreported revenue.
Expenses need the same discipline. Vehicles, equipment, home office, supplies, repairs, property costs, and contractor payments require evidence and an income-earning purpose. Where personal use exists, the allocation should be reasonable and documented.
Property, payroll, business, and personal accounts can connect
An audit may start with one account but affect others. A sole proprietor’s personal return may connect to GST/HST and business banking. An incorporated owner can have payroll, shareholder transactions, expenses, and personal reporting. Rental activity can connect to property, banking, and other income accounts.
We consider these links before detailed submissions are made. A deposit explanation should agree with books and GST/HST. Worker payments should fit payroll and expense records. Property costs should make sense given actual use. This reduces contradictory answers and helps identify potential tax, interest, penalties, payment, and collections exposure.
Rebuild missing records from credible sources
Older files can be incomplete after a bank change, lost receipt, unavailable supplier, former bookkeeper, or account closure. Banks, cards, suppliers, clients, employers, contracts, emails, property records, accounting backups, prior returns, and CRA information can support a factual reconstruction. The objective is the best accurate evidence, not an unsupported estimate.
Do not let the response deadline become the strategy
CRA deadlines should be taken seriously, but they do not require an improvised answer. If historical statements, duplicate invoices, payroll reports, property documents, or information from a former adviser are needed, the work should be identified early. In appropriate circumstances, CRA can be asked for more time before the deadline, with a clear explanation of what is being collected.
A rushed response can leave the auditor with only part of the story. It may also force the taxpayer to correct an explanation later when the missing records arrive. We help organize the response sequence: identify the issue, collect the evidence, reconcile the figures, and communicate what remains outstanding. That approach keeps the file moving while protecting the quality of the audit record.
Keep CRA communication documented
CRA may follow up by phone, email, letter, meeting, or secure upload. Details should be checked against records before an answer is given. We help prepare written submissions identifying the audit question, facts, calculation, and support, while keeping a clear log of requests and responses.
Review a proposal before reassessment
CRA may accept the return, request final information, send a proposal, or issue a reassessment. A proposal can reveal an overlooked document or incorrect assumption that can still be addressed. If CRA reassesses, objection deadlines, interest, penalties, payment arrangements, and collections concerns may apply.
Get a clear audit plan
If CRA has contacted you about a Pembroke audit, a confidential review can make the next step manageable. We will review the audit years and accounts, CRA’s questions, available records, and the business, property, or personal facts needing explanation. From there, you can respond with an organized plan grounded in evidence.