Corporate Income Tax Reviews
We assist businesses with CRA corporate income tax reviews.
If your company receives a CRA review letter or is asked to provide accounting records, invoices, bank statements, or other supporting documents, we can help you understand the CRA's request, prepare the required information, respond to the CRA, and assist throughout the review process.
Below are some common questions about CRA corporate income tax reviews.
How do I know if a CRA letter is genuine?
Tax scams have become increasingly common. Fraudsters may send emails, text messages, or letters claiming to be from the CRA and ask for payment or sensitive business information.
If you receive a notice, you can first log in to your CRA My Business Account to see whether the same correspondence appears there. You should also verify your company name, Business Number, and the reference number on the letter. If you are still unsure, contact the CRA directly before making any payment or providing confidential information.
Does receiving a CRA corporate tax review mean my tax return is incorrect?
Not necessarily.
The CRA reviews selected corporate tax returns each year. Some reviews are random, while others focus on specific income, expenses, or transactions that require additional supporting information.
Receiving a review letter does not mean your company has filed an incorrect return, nor does it automatically result in additional tax, penalties, or interest. In many cases, the review is completed once the requested records have been provided.
Why is my company being reviewed?
There are many possible reasons.
Some reviews are selected randomly. Others may result from significant changes in income, expenses, losses, or other items reported on the tax return compared with previous years or similar businesses.
The CRA may also compare information received from banks, customers, suppliers, shareholders, or other third parties with your tax filings. A review does not necessarily mean your company has done anything wrong.
What does the CRA usually review?
Common review areas include:
Business income
Cost of sales
Payroll expenses
Management fees
Vehicle expenses
Travel expenses
Meals and entertainment
Shareholder transactions
Shareholder loans
Related-party transactions
Capital assets and capital cost allowance (CCA)
The CRA may request supporting documents such as the general ledger, bank statements, invoices, receipts, contracts, or other records to verify the information reported on your tax return.
Do I have to respond to a CRA review?
Yes.
You should carefully read the review letter, understand what information has been requested, and respond before the deadline.
Ignoring a CRA review may result in adjustments being made based on the information available to the CRA. This could lead to certain expenses being denied, taxable income being increased, and additional tax being assessed.
If more time is needed to gather the requested documents, you may contact the CRA to request an extension.
Should I provide everything the CRA asks for?
Read the CRA's request carefully and provide documents that relate to the specific review.
In general, it is not necessary to submit records that are unrelated to the issues being reviewed.
Before submitting documents, it is advisable to ensure that your accounting records, bank statements, invoices, and tax filings are consistent. If certain transactions require additional explanation, supporting notes may also be helpful.
Documents can usually be submitted electronically through CRA My Business Account or by following the instructions provided by the CRA reviewer.
What if some records or invoices are missing?
Do not panic.
Missing invoices, bank records, or contracts can often be obtained again from banks, suppliers, customers, or other sources. Some transactions may also be supported by payment records, emails, or other documentation.
If certain records are genuinely unavailable, explain the situation honestly to the CRA. You should never create false invoices or provide inaccurate information.
Will a CRA review delay my tax refund?
It may.
If your corporation is expecting a refund and the related items are under review, the CRA may hold all or part of the refund until the review has been completed.
A delayed refund does not necessarily mean there is a problem with your tax return. In many cases, the CRA simply waits until the review has been finalized.
What happens if the CRA disagrees with my tax return?
If the CRA does not accept certain income or expense claims, it may issue a reassessment that adjusts your taxable income.
Depending on the circumstances, additional tax, interest, and possibly penalties may apply.
If you disagree with the CRA's conclusions, you may be able to provide additional information or file a formal objection.
Can you assist with a CRA corporate income tax review?
Yes.
If your company has received a CRA review letter or has been asked to provide accounting records or supporting documents, we can assist you in understanding the CRA's request, organizing the required information, preparing your response, and communicating with the CRA throughout the review process.
If you would like to learn more about our services, please contact us.