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CPA Answers · Knowledge Base · Canada 2026

How to Respond to a CRA Audit Letter

A licensed Ontario CPA's step-by-step guide to responding to a CRA audit letter. What the letter means, the first steps to take, the deadline and how to extend it, what documents to gather, how to authorize a representative, what not to do, and your objection and appeal rights if you disagree.

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Quick Answer

Read the letter carefully and note the tax years, the documents requested and the deadline. Do not ignore it. Gather and organize exactly what is asked for, respond in writing on time, and authorize a CPA to represent you and deal with the auditor. Cooperate fully and honestly.

What a CRA Audit Letter Actually Is

A CRA audit letter is a formal notice that the Canada Revenue Agency is reviewing one or more of your tax returns and needs supporting information to verify what you reported. It identifies the tax years and issues under review, lists the specific documents the auditor wants, sets a deadline to respond, and names the auditor handling the file. Receiving one does not mean you have done something wrong, audits are triggered by random selection, industry patterns, or a mismatch between your return and third-party data, and many audits simply confirm the return was correct. The letter is a request to verify, and the right response is a calm, organized, on-time one. We provide CRA audit support for businesses across Ontario, from the first letter to resolution.

The First Steps When the Letter Arrives

Before you gather a single document, read the letter carefully and pin down three things: the tax years and issues under review, exactly what is being requested, and the deadline to respond. These three points shape everything that follows. Do not ignore the letter, and do not fire off a quick, emotional reply. This is also the moment to decide whether to bring in a CPA, ideally before you respond, so the reply is considered and complete.

First StepWhy It Matters
Identify the years and issuesTells you the exact scope, so you respond to what was raised and nothing more.
List the documents requestedTurns the letter into a clear checklist of what you must produce.
Note the deadlineA timely response sets the tone; a missed deadline invites a reassessment on the CRA's terms.
Decide on representationA CPA authorized early can manage the whole exchange and protect your position.

What Documents the CRA Usually Wants

The letter lists what is required for your specific review, but the common requests are predictable. Assembling them cleanly, organized to match the letter's list, is half the battle.

DocumentWhat It Supports
Bank and credit card statementsProof of income deposits and business payments.
Sales invoices and income recordsVerifies the revenue reported on the return.
Expense receipts and purchase invoicesSupports every deduction and input tax credit claimed.
Contracts and agreementsExplains the substance behind larger transactions.
Mileage logs and payroll recordsSupports vehicle claims and employment expenses.
General ledger or bookkeeping fileLets the auditor trace amounts from source to return.

Provide exactly what is asked, and no more. Answer the request accurately and completely, but do not volunteer unrelated records or open up years the auditor did not raise. Over-disclosure can expand the scope of the audit. A complete, honest, precisely-targeted response is the goal. CRA Audit Representation →

The Deadline, and How to Extend It

The letter states a deadline, often around 30 days, though it varies. Meeting it matters, because a prompt, organized response sets a cooperative tone for the whole audit. If you genuinely cannot gather everything in time, contact the auditor before the deadline and request a reasonable extension, explaining why. Auditors frequently grant a short extension when the request is made in good faith and on time. What you must not do is let the deadline pass in silence, that removes your chance to explain your position and lets the CRA reassess on its own assumptions.

Authorizing a CPA to Represent You

For a business audit or any complex issue, authorizing a CPA to deal with the CRA on your behalf is one of the most protective steps you can take. Once authorized through the CRA's Represent a Client system, your CPA can speak with the auditor, receive correspondence and submit documents for you, so you are not answering an auditor's questions off the cuff. A representative keeps the exchange focused, accurate and consistent, and makes sure only what is requested is provided. Setting up the authorization is usually the first thing we do when a client brings us an audit letter.

What Not to Do

Most audits that go badly go badly for avoidable reasons. Knowing the traps is half of avoiding them.

Do NotWhy
Ignore the letterThe CRA can reassess on its own assumptions, with penalties and interest.
Miss the deadline silentlyRemoves your chance to explain and worsens the outcome.
Volunteer extra informationCan expand the audit into years or issues not originally raised.
Guess, backdate or fabricateTurns a routine review into a serious compliance problem.
Explain verbally without documentsUnsupported statements do not carry weight; documents do.

Never manufacture or backdate a document to fill a gap. If you have lost a receipt, provide what you have and reconstruct genuine support from bank records and vendor duplicates, and be honest about what is missing. An honest, well-documented effort is always safer than a fabricated record, which can escalate a routine audit into gross-negligence penalties or worse.

If You Disagree: Objection and Appeal Rights

After reviewing your response, the auditor may accept the return, ask follow-up questions, or send a proposal letter setting out changes they are considering, usually with about 30 days for you to respond before a reassessment is issued. That proposal stage is a real opportunity to correct a misunderstanding or provide more support. If a reassessment is still issued and you disagree, you have the right to file a Notice of Objection, generally within 90 days of the reassessment, which sends the matter to the CRA's Appeals division for an independent review, with further appeal rights beyond that. We manage each of these stages, the response, the proposal reply, and the objection where it is warranted.

Case Study: A Business Audit Resolved on the Honest Path

An Ontario business owner received a CRA audit letter reviewing two years of corporate returns, focused on expense deductions and HST input tax credits, with a 30-day deadline. Some receipts had been lost. We set up representation through Represent a Client, requested a short extension while we reconstructed genuine support from bank records and vendor duplicates, and submitted an organized response matched to the letter's list, with an honest note on the few items that could not be fully supported. The auditor accepted most of the claims and proposed a small adjustment on the unsupported items, which we did not contest because it was correct. No penalties were applied. The figures here are illustrative of the work we do, not a specific client file. CRA Audit Support →

Let Gondaliya CPA Handle Your CRA Audit

We review the audit letter, set up representation, organize your response, deal with the auditor, and handle proposal letters and objections, all on the honest, compliant path, at flat-fee pricing including HST.

Full Audit Representation

We set up Represent a Client authorization and deal with the auditor directly, so you never face the questions alone. Flat fee, including HST.

Organized Response

We gather and organize exactly what is requested, matched to the letter, and respond in writing on time or arrange an extension.

Objections & Appeals

If you disagree with a reassessment, we prepare and file the Notice of Objection and represent you through the Appeals process.

Frequently Asked Questions — Responding to a CRA Audit Letter

What is a CRA audit letter?
A CRA audit letter is a formal notice that the Canada Revenue Agency is reviewing one or more of your tax returns and needs supporting information. It names the tax years and issues under review, lists the documents requested, gives a deadline to respond, and names the auditor. It is not an accusation of wrongdoing, it is a request to verify what you reported.
What should I do first when I receive a CRA audit letter?
Read it carefully and note three things: the tax years and issues under review, exactly what documents are requested, and the deadline to respond. Do not ignore it and do not panic. Confirm the letter is genuine, then start gathering the records it asks for. If the scope or wording is unclear, this is the point to speak with a CPA before you reply.
How long do I have to respond to a CRA audit letter?
The letter states a deadline, often around 30 days, though it varies. Meeting it matters, because a timely, organized response sets the tone for the whole audit. If you cannot gather everything in time, you can usually request an extension from the auditor before the deadline, rather than simply missing it. We help clients respond on time or arrange a reasonable extension.
Can I ignore a CRA audit letter?
No. Ignoring a CRA audit letter is the worst response. If you do not reply, the CRA can reassess based on its own assumptions, disallow deductions, add income, and apply penalties and interest, often on terms far less favourable than if you had cooperated. Silence removes your chance to explain your position. Always respond, on time, with the records requested.
Should I hire a CPA to handle a CRA audit?
It is strongly advisable, especially for a business or a complex issue. A CPA can review the letter, organize the response, communicate with the auditor on your behalf, make sure only what is requested is provided, and protect your position throughout. Authorizing a representative also means you are not navigating the auditor's questions alone. We represent clients through CRA audits from the first letter to resolution.
How do I authorize a CPA to deal with the CRA for me?
You authorize a representative through the CRA's Represent a Client system, typically by having your CPA request authorization that you confirm, or by signing the appropriate authorization. Once authorized, your CPA can speak with the auditor, receive correspondence and submit documents on your behalf. We set up the authorization as the first step so we can manage the audit directly with the CRA.
What documents does the CRA usually ask for in an audit?
It depends on the issue, but common requests include bank statements, sales invoices and income records, expense receipts and purchase invoices, contracts, mileage logs, payroll records, and your general ledger or bookkeeping file. The letter lists what is required for your specific review. We help you assemble exactly what is asked for, organized and cross-referenced, so the response is clear and complete.
How should I organize my response to a CRA audit?
Provide exactly what is requested, clearly labelled and organized to match the letter's list, with a short covering summary. Do not send a disorganized pile of paper, and do not volunteer unrelated records. A tidy, complete, well-referenced response makes the auditor's job easier and resolves the review faster. We prepare the response package so each requested item is easy for the auditor to verify.
Should I send more information than the CRA asked for?
No. Provide what is requested, accurately and completely, but do not volunteer extra records or open up years or issues the auditor did not raise. Over-disclosure can expand the scope of the audit. The goal is a complete, honest response to the actual request, nothing withheld and nothing unnecessary added. We help clients answer precisely what was asked.
What if I have lost some of the receipts the CRA wants?
Provide what you have and reconstruct what you can from bank and credit card records, vendor duplicates and other supporting evidence, and be honest about what is missing. The CRA may disallow deductions that cannot be supported, but an honest, well-documented effort is always better than silence or guesswork. We help clients rebuild support properly, using genuine records, never fabricated ones.
Can I request more time to respond to a CRA audit?
Usually yes. If you need more time to gather records or arrange representation, contact the auditor before the deadline and request a reasonable extension, explaining why. Auditors often grant a short extension when the request is made in good faith and on time. Missing the deadline without contact is far worse. We handle these requests so the audit stays on a cooperative footing.
Does a CRA audit letter mean I did something wrong?
Not necessarily. Audits and reviews are triggered by many things, random selection, industry patterns, a mismatch between your return and third-party data, or a specific claim the CRA wants to verify. Many audits confirm the return was correct. The letter is a request to verify, not a finding of wrongdoing. The right response is to cooperate and support what you filed.
What is the difference between a CRA review and a CRA audit?
A review is usually a narrower, often automated check of a specific claim, resolved by sending supporting documents. An audit is broader and more formal, involving an auditor examining your books and records in depth, sometimes across several years. Both require a proper documented response. We handle both, and treat even a simple review carefully, because how you respond matters.
Can the CRA audit multiple years at once?
Yes. An audit can cover more than one tax year, and if the auditor finds an issue in one year, they may extend the review to other years. This is one reason to respond carefully and not to volunteer unrelated information. We assess the full scope when the letter arrives and manage the response so the audit stays focused on what was actually raised.
What happens after I respond to a CRA audit letter?
The auditor reviews your documents and may accept the return as filed, ask follow-up questions, or propose adjustments. If adjustments are proposed, you usually receive a proposal letter and a chance to respond before a reassessment is issued. This is a critical stage to make your case. We manage the back-and-forth and respond to any proposed adjustments before they become final.
What is a proposal letter in a CRA audit?
A proposal letter sets out the changes the CRA is considering to your return and the reasons, and gives you a period, often 30 days, to respond before it reassesses. It is your opportunity to provide more information, correct a misunderstanding or dispute the proposed change. Responding well here can change the outcome. We prepare a substantive reply to proposal letters on behalf of clients.
Can I disagree with the CRA's audit findings?
Yes. If you disagree with a reassessment resulting from an audit, you have the right to formally object by filing a Notice of Objection, generally within 90 days of the reassessment. This sends the matter to the CRA's Appeals division for an independent review. There are further appeal rights beyond that. We advise on whether to object and prepare the objection where it is warranted.
How do I file a Notice of Objection?
You file a Notice of Objection with the CRA, generally within 90 days of the date on the notice of reassessment, setting out the facts and reasons you disagree. It goes to an Appeals officer who reviews the file independently of the auditor. Meeting the deadline is essential. We prepare and file objections and represent clients through the Appeals process.
Will responding to a CRA audit trigger penalties?
Responding properly does not create penalties, it helps avoid them. Penalties arise from unreported income, unsupported claims or, in serious cases, gross negligence, not from cooperating with the audit. A complete, honest, timely response is your best protection against penalties. Ignoring the letter or providing false information is what leads to the worst outcomes. We help you respond in a way that limits exposure.
Should I talk to the CRA auditor directly?
You can, but for a business or a complex issue it is usually better to have your CPA handle the communication once authorized. Answering auditor questions off the cuff can inadvertently expand the scope or create misunderstandings. A representative keeps the exchange focused and accurate. We deal with the auditor directly for our clients so responses are considered and consistent.
What if the CRA audit involves unreported income?
If the audit uncovers income that was not reported, the correct path is to address it honestly, the CRA may assess the tax, interest and possibly penalties. In some cases, where you come forward before the CRA contacts you, the Voluntary Disclosures Program can help, but that generally does not apply once an audit letter has been issued. We advise on the honest, compliant way to resolve unreported income.
Can I use the Voluntary Disclosures Program after an audit letter?
Generally no. The Voluntary Disclosures Program is for taxpayers who come forward before the CRA contacts them about the issue. Once you have received an audit or enforcement letter on a matter, a disclosure on that matter is usually no longer considered voluntary. This is exactly why addressing issues proactively matters. We advise on VDP eligibility and, where it has closed, on the best remaining path.
How far back can the CRA audit my returns?
The normal reassessment period is generally three years from the date of the original notice of assessment for most individuals and Canadian-controlled private corporations. The CRA can go back further where there is misrepresentation attributable to neglect, carelessness or wilful default, or fraud. Keeping records for six years matters for this reason. We assess how the reassessment period applies to your situation.
What records do I need to keep in case of a CRA audit?
Keep adequate books and records, income and expense records, receipts, invoices, bank and credit card statements, contracts, payroll records and mileage logs, generally for six years from the end of the tax year. Good records are your defence in an audit, because every claim you can support stands. We help clients keep audit-ready books so a future audit is routine rather than a crisis.
Can a CRA audit be done remotely or does the auditor visit?
Both happen. Many audits are conducted by correspondence, with documents exchanged electronically or by mail, while some, particularly larger business audits, involve the auditor examining records on site or requesting a meeting. Either way, a documented, organized response is central. We manage correspondence audits fully and prepare clients and their records where an on-site or in-person element is involved.
How long does a CRA audit take?
It varies widely, from a few weeks for a narrow review to many months for a detailed business audit across several years. How quickly and completely you respond has a real effect on the timeline. A prompt, organized response tends to shorten the process. We keep the audit moving by responding fully and following up, so it resolves as efficiently as the CRA allows.
What does it cost to have a CPA handle a CRA audit?
We handle CRA audit support on an AFFORDABLE flat fee, quoted upfront before we begin, with all fees including HST and no hourly billing, so you know the cost in advance. The fee depends on the complexity of the audit and the volume of records. For clients on our bookkeeping engagements, audit support is often included. Please book a consultation for an exact quote.
What is the biggest mistake people make with a CRA audit letter?
Ignoring it, or responding late, incompletely or emotionally. The second biggest is volunteering too much and expanding the scope, or trying to explain verbally without documents. The letter deserves a calm, organized, on-time, document-backed response, ideally through a representative. We see audits go well when clients respond properly and early, and badly when the letter is left unanswered.
Can Gondaliya CPA help me respond to a CRA audit letter?
Yes. We review the audit letter, set up representation through Represent a Client, gather and organize exactly what is requested, respond to the auditor in writing, handle proposal letters, and file objections where warranted, all on the honest, compliant path. Fees are an AFFORDABLE flat amount including HST, quoted upfront, with payment by Interac e-Transfer to info@gondaliyacpa.ca, auto-deposit enabled, security question Not Applicable.
How do I get started if I have received a CRA audit letter?
Please book a free consultation and have the letter in front of you, so we can note the years, issues, requested documents and deadline. We will confirm the scope, set up representation, quote a fixed flat fee including HST, and prepare an organized, on-time written response. The sooner we start, the more time we have to gather records and respond properly before the deadline.

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