Top Ten CRA Audit Flags

Taxpayers often ask why the CRA commenced an audit or whether taking a particular step might target them for a future audit.  These are reasonable concerns, since the CRA's approach to audit selection is generally not random, but rather based on risk assessment. 

Research comparing the effectiveness of random versus targeted audits was conducted under the CRA's Small and Medium Enterprises Research Audit Program (formerly the Core Audit Program), which utilized random auditing.¹  According to the 2010-2011 CRA Report, in that year random auditing detected significant non-compliance in only 12.2% of audits, while targeted auditing based on risk assessment detected significant non-compliance in 46.7% of cases.  Therefore, targeted auditing based on risk assessment has become the CRA's preferred approach.  In the 2012-13 year, the CRA commenced fewer audits than in the prior year, in part because of a strategic decision to focus resources on auditing