A CRA audit needs an explanation that follows the money
Sarnia taxpayers may receive a CRA audit request involving contract or industrial work, a small business, property, rental income, GST/HST, payroll, personal banking, or cross-border reporting. The records may be divided between contracts, invoices, payment reports, bank accounts, receipts, employer information, property files, and accounting software. CRA may see a deposit or a return amount without seeing the work, transaction, or business fact that explains it.
The audit letter normally identifies the years being reviewed, account, requested records, CRA contact, and deadline. It may concern income, expenses, GST/HST, payroll, property use, rental activity, deposits, or foreign reporting. A meaningful response addresses that specific issue. It should show how the amounts were calculated and which documents support the reported tax position.
Tax Help Canada helps Sarnia residents, contractors, business owners, landlords, property owners, and families manage CRA audit files. We review the audit scope, organize evidence, prepare reconciliations and explanations, communicate with CRA, and help assess a proposal or reassessment before deadlines create further pressure.
Identify what CRA is actually testing
CRA may ask for statements, contracts, invoices, receipts, GST/HST returns, payroll reports, property documents, foreign records, or a written explanation. A deposit review can test reported income. A payment-to-worker request can concern payroll deductions or contractor classification. A property request may concern rent, personal use, repairs, or an improvement.
For a contractor, the file can include contracts, invoices, client payments, vehicles, tools, equipment, expenses, and GST/HST. A business may have sales reports, merchant deposits, payroll, supplier expenses, refunds, and tax collected. Rental files can include leases, deposits, financing, taxes, insurance, repairs, and personal-use periods. This early review identifies records that should be collected from banks, clients, suppliers, employers, property managers, former advisers, or online platforms.
Reconcile contracts, income, deposits, and GST/HST
CRA may compare reported income with contracts, invoices, deposits, payment reports, GST/HST returns, and third-party information. A deposit is not automatically income. It may be business revenue, rent, tax collected, a transfer, loan proceeds, reimbursement, refund, or funds received for another person. Significant items need documented support.
We prepare schedules linking business sales to invoices or payment reports, rent to leases and deposits, and transfers to corresponding account activity. Loans, reimbursements, refunds, merchant fees, and other non-income amounts are supported by records. This helps explain why gross sales, deposits, and GST/HST may not match line by line.
Expenses must be handled with equal care. Vehicles, tools, equipment, home office, travel, supplies, repairs, property costs, and worker payments require evidence and an income-earning purpose. Personal use should be separated through a reasonable allocation.
Consider all related tax accounts
An audit may begin with a personal return but reach GST/HST, payroll, corporate records, business banking, rental activity, and cross-border reporting. A contractor’s sales should agree with deposits and GST/HST. An incorporated owner may have payroll, shareholder transactions, expenses, and personal income. Cross-border records should fit the income, tax credits, transfers, and reporting under review.
We consider the connected accounts before detailed submissions are made. This reduces inconsistent answers and helps identify potential tax, interest, penalties, payment, and collections exposure.
Rebuild incomplete files from credible evidence
Older records may be incomplete after a bank change, lost receipt, unavailable supplier, closed online account, or former bookkeeper. Bank and card statements, employers, suppliers, clients, contracts, email, property records, accounting backups, prior returns, and CRA information can help reconstruct a factual position. The objective is the best accurate evidence available, not an unsupported estimate.
The reconstruction should make its method visible. Income can be linked to contracts, invoices, and deposits; expenses to statements and vendor records; property income to lease and banking history. This allows CRA to test the response without relying on an assumption about missing records.
Control communication and the response deadline
CRA may follow up by phone, letter, email, meeting, or secure upload. We help prepare written submissions that identify the audit question, facts, calculation, and support, while keeping a clear record of requests and responses. If historic statements, duplicate invoices, payroll reports, or foreign records are still being collected, that should be raised before the deadline. In appropriate circumstances, CRA can be asked for more time with a clear explanation.
Review a proposal before reassessment
CRA may accept the reporting, request final information, send a proposal, or issue a reassessment. A proposal may reveal an overlooked document or incorrect assumption while there is still time to respond. Once reassessed, objection deadlines, interest, penalties, payment arrangements, and collections concerns can apply.
Get a clear audit plan
If CRA has contacted you about a Sarnia audit, a confidential review can make the next step manageable. We will review the years and accounts, CRA’s questions, available records, and the contractor, business, property, cross-border, or personal facts needing explanation. From there, you can respond with an organized plan grounded in evidence.