How tax returns are selected for audit?

Once you file a tax return, your return is recorded in the Canada Revenue Agency (CRA)’s computer system. The computer system can sort tax returns into various groups to help auditors select tax returns for audit. Most returns are selected for audit review from Computer-generated lists.

The computer system can also compare selected financial information tax payers engaged in similar business or occupations and generate lists of returns with audit potential. From these lists, specific returns are selected for audit.

In addition to computer-generated lists, there are three other common ways of selecting tax return for audit:

Audit projects

From time to time, the CRA will test the compliance of a particular group of tax payers. If the test results indicate that there is significant non-compliance within the group, its members can be selected for audit on a local, regional, or national basis.

Leads

Tax returns can be selected for audit due to information from other audits or investigation, as well as information from other sources.

Secondary files

Sometimes, a return is selected for audit because it is associated with other previously selected files. For example, if one partner was selected for audit, other members in the partnership may also be selected for audit.

The CRA's matching program

Voluntary Disclosure Program (VDP)

For how long do I have to keep my records?

Additional information