A CRA audit needs a clear record of the facts behind the return

Strathroy-Caradoc taxpayers may receive a CRA audit request involving contract work, a small business, rural property, rental income, GST/HST, payroll, personal banking, or an expense claim. The relevant records may be spread across invoices, statements, receipts, contracts, property documents, equipment records, email, and bookkeeping systems. CRA may see a number on a return or a bank deposit without seeing the transaction and practical facts that explain it.

The audit letter normally identifies the years under review, account, documents requested, CRA contact, and deadline. It may test income, expenses, GST/HST, payroll, property use, rental activity, deposits, or a personal claim. A meaningful response should be built around the audit question. It should explain the calculation and point the auditor to records that support the reported position.

Tax Help Canada helps Strathroy-Caradoc residents, contractors, business owners, landlords, property owners, and families manage CRA audit files. We review scope, organize evidence, prepare reconciliations and explanations, communicate with CRA, and help assess proposals or reassessments before time limits create additional pressure.

Begin by identifying what CRA is testing

CRA may ask for statements, invoices, receipts, contracts, GST/HST returns, payroll reports, property documents, equipment records, or a written explanation. A deposit review can test reported income. A property request may concern rent, personal use, repairs, or a capital improvement. A worker-payment request can concern payroll deductions or contractor classification.

For a contractor or small business, files may include customer invoices, client payments, equipment, vehicles, supplies, expenses, payroll, and GST/HST. Property and rental records can include leases, deposits, financing, taxes, insurance, repairs, and periods of personal use. This first review identifies missing information early enough to request it from banks, suppliers, clients, property managers, former bookkeepers, or online portals.

Reconcile income, deposits, 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 can be business revenue, rent, tax collected, a transfer, loan proceeds, reimbursement, refund, or money received for another person. Significant amounts need a credible source.

We prepare schedules that link 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 need supporting evidence. This helps explain why gross sales, bank deposits, and GST/HST may not match line by line.

Expenses need the same discipline. Vehicles, equipment, home office, supplies, travel, repairs, property costs, and worker payments require evidence and an income-earning purpose. Where personal use exists, the allocation should be reasonable and documented.

Property, equipment, business, and personal accounts can connect

An audit may begin with one return but affect business banking, GST/HST, payroll, corporate records, rental activity, property use, equipment claims, and personal reporting. A sole proprietor’s sales should fit deposits and GST/HST. An incorporated owner can have payroll, shareholder transactions, business expenses, and personal income. Property costs should make sense given actual business, rental, and personal use.

We review these connections 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 inconsistent answers and helps identify potential tax, interest, penalties, payment, and collections exposure.

Rebuild incomplete records with credible sources

Older files can be incomplete after a bank change, lost receipt, unavailable supplier, closed online account, or a former adviser. Bank and card statements, suppliers, clients, contracts, email, property records, equipment 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.

The method should be visible. Sales can be tied to invoices and deposits, expenses to statements and vendor records, and rent to lease and banking history. This gives CRA a practical way to test the explanation.

Control CRA communication and timing

CRA may follow up by phone, letter, email, meeting, or secure upload. We help prepare written submissions identifying the audit question, facts, calculation, and evidence, while keeping a log of requests and responses. If historic statements, duplicate invoices, payroll reports, or property records are still being collected, that should be raised before the deadline. In appropriate circumstances, CRA can be asked for more time.

Review a proposal before reassessment

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 an opportunity 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 Strathroy-Caradoc 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, rural, or personal facts requiring explanation. From there, you can respond with an organized plan grounded in evidence.