A CRA audit needs a clear explanation of the records
Perth taxpayers can receive a CRA audit letter about an owner-managed business, professional practice, contract work, rental property, GST/HST, payroll, personal banking, or a deduction claimed on a return. The documents may be split between invoices, statements, receipts, property files, email, accounting software, and an adviser who no longer has the file. CRA may see a figure, deposit, or expense without seeing the day-to-day facts behind it.
The audit letter normally identifies the years being reviewed, the account, the information requested, the CRA contact, and a response deadline. It may test income, expenses, GST/HST, payroll, property use, rental activity, or unexplained deposits. A useful response is organized around CRA’s questions. Sending a large group of files without a calculation or explanation can make it harder for an auditor to understand what the records prove.
Tax Help Canada helps Perth residents, business owners, contractors, landlords, property owners, and families manage CRA audit files. We review the scope, organize evidence, prepare reconciliations and written explanations, communicate with CRA, and help assess a proposal or reassessment before a deadline creates more pressure.
Start by identifying the issue CRA is testing
CRA may ask for bank statements, invoices, receipts, contracts, GST/HST returns, payroll records, property documents, or a written explanation. A deposit review may be testing reported income. A property request may concern rent, personal use, repairs, or the distinction between a current expense and a capital improvement. A payment-to-worker request can concern payroll deductions or whether a person was properly treated as a contractor.
For an independent business, records may include client invoices, customer payments, equipment, vehicles, subcontractor costs, expenses, payroll, and GST/HST. Rental files can include leases, deposits, financing, taxes, insurance, repairs, and periods of personal use. The first review identifies what is available and what needs to be requested from banks, suppliers, clients, property managers, former bookkeepers, or online systems.
Reconcile income, deposits, and GST/HST
CRA may compare income reported on a return with invoices, deposits, payment reports, GST/HST filings, and third-party information. A deposit is not automatically income. It may be a sale, rent, tax collected, a transfer, loan proceeds, a reimbursement, a refund, or money received on behalf of another person. The material items should be traced to credible records.
We prepare schedules linking sales to invoices or payment reports, rent to leases and deposits, and transfers to corresponding account movements. Loans, reimbursements, refunds, merchant fees, and other non-income amounts should have support. This helps explain why gross sales, bank deposits, and GST/HST may not match line by line and reduces the risk that CRA treats a non-income amount as unreported revenue.
Expenses require the same discipline. Vehicle costs, equipment, office costs, supplies, travel, repairs, and contractor payments need proof and an income-earning purpose. Where there is a personal component, the allocation should be reasonable and documented.
Consider the connected accounts before responding
An audit can begin with one return and affect more than one account. A sole proprietor’s T1 reporting can connect to business banking and GST/HST. An incorporated owner may have corporate expenses, shareholder transactions, payroll, and personal reporting. A rental file can affect banking and property records.
We look for these links before detailed submissions are made. A deposit explanation should fit the books and GST/HST returns. Worker payments should agree with payroll and expense records. Property costs should make sense given the actual use of the property. This reduces inconsistent answers and helps identify possible tax, interest, penalties, payment, and collections exposure.
Rebuild missing records from credible sources
Older records may be incomplete after an account change, lost receipt, closed supplier, unavailable online login, or former bookkeeper. Bank and card statements, suppliers, clients, contracts, email, property records, accounting backups, prior returns, and CRA information can support a factual reconstruction. The goal is the best accurate evidence available, not an unsupported estimate.
If the figures are reconstructed, the method should be transparent. For example, a sales schedule can be linked to invoice numbers and deposits; expenses can be matched to statements and vendor records. This gives CRA a practical way to test the response.
Do not let the deadline become the strategy
A CRA deadline needs attention, but it should not force an improvised answer. If duplicate statements, historic invoices, payroll reports, or property records are needed, identify that work early. In appropriate circumstances, CRA can be asked for more time before the deadline, with a clear explanation of what is being collected.
A partial response can leave the auditor with only part of the story. We help sequence the work: identify the issue, collect the evidence, reconcile the figures, and explain what remains outstanding. It keeps the file moving while protecting the quality of the audit record.
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 follow.
Get a clear audit plan
If CRA has contacted you about a Perth audit, a confidential review can make the next step manageable. We will review the years and accounts, CRA’s questions, available records, and the business, property, or personal facts requiring explanation. From there, you can respond with an organized plan grounded in evidence.