A CRA audit needs a clear record of how each amount arose
Smiths Falls taxpayers may receive a CRA audit request about a contractor business, local enterprise, rental property, GST/HST, payroll, personal banking, or a deduction claimed on a return. The supporting records may be divided between invoices, accounts, receipts, contracts, property documents, email, and bookkeeping software. CRA may see a deposit or an expense entry without seeing the practical transaction it represents.
The audit notice identifies the years under review, account, requested information, CRA contact, and deadline. It may concern income, expenses, GST/HST, payroll, property use, rental activity, deposits, or a personal claim. A response should answer the audit question directly and explain how the relevant figures were calculated. An unstructured collection of documents can leave CRA to draw conclusions without the full facts.
Tax Help Canada helps Smiths Falls residents, contractors, business owners, 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 proposals or reassessments before deadlines create more pressure.
Identify the issue CRA is testing first
CRA may request bank statements, invoices, receipts, contracts, GST/HST returns, payroll reports, property records, or a written explanation. A deposit review may test reported income. A property request can concern rent, repairs, personal use, or whether work was a capital improvement. A worker-payment request can concern payroll deductions or contractor classification.
Contractor files can include contracts, client invoices, payments, vehicles, equipment, expenses, and GST/HST. A small business may have sales reports, customer deposits, payroll, refunds, supplier costs, and tax collected. Rental records can include leases, deposits, financing, taxes, insurance, repairs, and personal-use history. This first review identifies missing documents early enough to obtain them from banks, suppliers, clients, property managers, former bookkeepers, or online accounts.
Reconcile income, deposits, expenses, and GST/HST
CRA may compare return income with invoices, deposits, payment reports, GST/HST filings, 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. Important amounts should be traced to reliable records.
We prepare schedules that link sales to invoices or payment reports, rent to leases and deposits, and transfers to matching account movements. Loans, reimbursements, refunds, merchant fees, and other non-income amounts require support. This helps explain why gross sales, bank deposits, and GST/HST do not always match line by line.
Expenses need the same care. Vehicles, equipment, home office, supplies, travel, repairs, property costs, and worker payments should be supported and tied to an income-earning purpose. Personal use should be separated through a reasonable allocation.
Review all connected tax accounts
An audit can start with one return yet affect business banking, GST/HST, payroll, corporate records, rental activity, and personal reporting. A sole proprietor’s sales should fit deposits and GST/HST. An incorporated owner may have payroll, shareholder transactions, expenses, and personal income. Property costs should fit the actual rental and personal use.
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. This reduces contradictory answers and helps identify potential tax, interest, penalties, payment, and collections exposure.
Rebuild incomplete records from reliable sources
Older files may be incomplete after a bank change, lost receipt, unavailable supplier, closed online account, 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 aim is the best accurate evidence available, not an unsupported estimate.
The method should be transparent. Sales can be tied to invoices and deposits, expenses to statements and vendor records, and rent to leases and banking history. This gives CRA a practical way to test the explanation.
Manage the deadline and review the outcome
CRA may follow up by phone, letter, email, meeting, or secure upload. We help prepare written submissions identifying the audit question, facts, calculation, and support, while keeping a clear record of requests and responses. If historic statements, duplicate invoices, payroll reports, or property documents are still being collected, that should be raised before the deadline. In appropriate circumstances, CRA can be asked for more time.
CRA may accept the reporting, request final information, send a proposal, or issue a reassessment. A proposal can 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 may follow.
Get a clear audit plan
If CRA has contacted you about a Smiths Falls audit, a confidential review can make the next step manageable. We will review the years and accounts, CRA’s questions, available evidence, and the business, property, rental, or personal facts requiring explanation. From there, you can respond with an organized plan grounded in evidence.