What happens during a CRA audit and how do I prepare?

A CRA audit is a review of your tax return to verify that the income, deductions, and credits you reported are accurate. For self-employed individuals, common audit triggers include: - Claiming high home office or vehicle expenses relative to income - Revenue that seems low for your industry or profession - Large fluctuations in income or expenses year over year - Repeated business losses (suggesting a hobby rather than a business) - Missing or inconsistent T-slips **Types of CRA review:** - **Processing review**: CRA mails you a request for supporting documents for specific line items — the most common type - **Desk audit**: More detailed, but done by correspondence without visiting you - **Field audit**: CRA auditor visits your premises — rare for small self-employed individuals **Preparation tips:** - Keep all receipts and invoices organised by category and year - Maintain a mileage logbook if claiming vehicle expenses - Keep home office measurements and calculations - Respond promptly to CRA correspondence — delays can worsen the outcome - Consider consulting a tax professional before responding to an audit

• High vehicle or home office claims relative to income are common audit triggers
• Most audits are processing reviews — CRA requests documents by mail
• Must produce records from the past 6 years
• Respond promptly to all CRA correspondence
• You can use a tax professional or accountant to represent you in an audit