CRA Audit Defense, Appeals & Voluntary Disclosures
When the Canada Revenue Agency comes knocking, you need more than just a bookkeeper. You need a strategic CPA defense team. We protect your assets, negotiate with auditors, and file aggressive Notices of Objection to fight unfair reassessments.
A CRA Audit is a Legal Negotiation, Not Just a Math Test.
Many business owners make the fatal mistake of representing themselves during a CRA audit. They assume that because they have "nothing to hide," they can simply hand over their QuickBooks file and the auditor will go away. This is incredibly dangerous.
CRA auditors are trained investigators looking for discrepancies, unreported income, and disallowed expenses. Every document you provide and every statement you make can be used to expand the scope of the audit. At Teixeira Accounting, we act as the impenetrable firewall between you and the CRA. We control the flow of information, challenge their assumptions, and ensure you do not pay a single dollar more than legally required.
Understanding the Threat: Types of CRA Audits
Not all audits are created equal. The CRA employs different tactics depending on what they suspect they will find. We have successfully defended clients against all of them.
The Desk Audit (Processing Review)
Often triggered by automated algorithms, the CRA sends a letter asking for receipts to verify specific claims (e.g., medical expenses, moving expenses, or a large business write-off). While seemingly benign, providing the wrong documentation can trigger a full-scale field audit.
The Field Audit (Comprehensive)
An auditor is assigned to conduct a deep dive into your corporate books, bank statements, and operational procedures. They will demand to see ledgers, invoices, and shareholder loan accounts. We mandate that these audits take place at our office, keeping the CRA out of your place of business.
Net Worth Assessments
The most aggressive tool the CRA has. If they suspect unreported cash income, they will ignore your books entirely. Instead, they calculate your personal living expenses and asset growth over several years. If your reported income couldn't possibly fund your lifestyle, they tax you on the difference. We aggressively dismantle these often-flawed calculations.
HST/GST Audits
The CRA frequently audits businesses to ensure Input Tax Credits (ITCs) are valid and that sales tax is being collected correctly. Because HST is considered "trust money," directors can be held personally liable for corporate HST debts. We ensure your ITCs are defended vigorously.
Payroll & Contractor Reviews
The CRA loves to reclassify "independent contractors" as "employees." If they succeed, you are suddenly on the hook for years of unremitted CPP, EI, penalties, and interest. We use established case law to defend your contractor relationships.
Arbitrary Assessments
If you fail to file your tax returns for multiple years, the CRA will simply guess how much you owe, usually inflating the number massively, and begin collection action. We step in to halt collections, file the outstanding returns accurately, and reduce the arbitrary debt.
The Teixeira Defense Protocol
When you hire us to handle an audit, you immediately stop talking to the CRA. We file an authorization (AUT-01) making us your sole representative. From that moment forward, the auditor must go through us.
The Information Firewall
We never hand over a raw data file or a box of receipts. We review every single document before the CRA sees it. If the auditor asks for something outside the legal scope of the audit, we formally deny the request.
Pre-Emptive Issue Resolution
Before we submit your ledgers, we identify the exact transactions the auditor will flag. We prepare the supporting case law, invoices, and legal arguments in advance, neutralizing their attacks before they even make them.
Negotiating the Proposal
At the end of the audit, the CRA issues a "proposal letter" detailing the extra taxes they intend to charge. You have 30 days to respond. We use this window to vigorously negotiate, often reducing the proposed reassessment significantly before it becomes official.
Why You Never Talk to the Auditor
The "Friendly" Auditor Trap
Auditors are trained to act friendly and helpful to get you talking. Casual conversation about your recent vacation or new car can be used to justify a Net Worth Assessment if your reported income doesn't support that lifestyle.
Accidental Confessions
Business owners often try to explain away a discrepancy and accidentally admit to a different, more severe tax violation (like using corporate funds for personal use without declaring a taxable benefit).
Scope Creep
If an auditor finds a small error in 2023, they can expand the audit to 2022 and 2021. Our job is to contain the audit to the smallest possible timeframe and scope.
CRA Audit Risk Estimator
See how quickly penalties and interest compound on disallowed expenses or unreported income during a CRA audit.
Estimated CRA Assessment (2 Yrs Late)
* A $50,000 error can quickly become a $100,000+ liability. Professional audit defense is crucial to negotiating away gross negligence penalties and interest relief.
This tool is for general information only and does not replace professional tax or accounting advice.
Notice of Objection & Appeals
If the auditor issues an unfair reassessment, the fight is not over. In fact, it just moves to a higher, more objective level.
The 90-Day Ticking Clock
Once a Notice of Reassessment is issued, you have exactly 90 days to file a formal Notice of Objection. If you miss this deadline, the debt becomes permanent and legally binding, regardless of how incorrect the auditor was.
Filing an Objection immediately halts CRA collection actions for personal income tax and corporate income tax (though not usually for HST or payroll trust funds). This buys us the time needed to build a robust legal defense.
The Appeals Division
When we file an Objection, your file is transferred from the original auditor to a completely different department: the CRA Appeals Division. Appeals Officers are generally more objective, better versed in tax law, and authorized to vacate or vary the auditor's original decision.
We draft highly technical, fact-based legal submissions citing the Income Tax Act and relevant Tax Court jurisprudence to prove why the original auditor was wrong.
The Voluntary Disclosures Program (VDP)
What happens if you know you made a mistake, hid income, or failed to file returns for years, but the CRA hasn't caught you yet?
You have a massive strategic advantage, but only if you act before they find you. The Voluntary Disclosures Program (VDP) allows taxpayers to come forward and correct inaccurate or incomplete information.
The Benefit: If accepted, you will have to pay the taxes owed, but the CRA will grant relief from prosecution and waive the massive gross negligence penalties (which can be 50% of the tax owed). They may also provide partial interest relief.
CRITICAL: A VDP application is only valid if it is "voluntary." If the CRA has already initiated an audit, sent a letter of inquiry, or begun an enforcement action, you are no longer eligible.
Common VDP Scenarios
- Unreported Offshore AssetsFailing to file Form T1135 for foreign property or investment accounts exceeding $100,000 CAD. Penalties for this are severe even if no tax is owed.
- Unfiled Tax Returns"Ghosting" the CRA for 5+ years. We can use the VDP to get you caught up without facing criminal tax evasion charges.
- Cash BusinessesContractors or restaurant owners who historically skimmed cash and now want to clean up their corporate structure to sell the business or sleep at night.
Why Choose Teixeira Accounting?
At Teixeira Accounting Firm Inc., we don't just record history; we write your financial future. Most accounting firms are reactive—they wait for you to bring them problems. We are proactive architects of your wealth and business growth.
Whether you're a scaling enterprise or a high-net-worth individual, we provide the strategic oversight, tax optimization, and bulletproof compliance you need to operate with absolute confidence.
The Teixeira Advantage
Proactive Tax Strategy
We don't just file your taxes; we actively look for ways to reduce your tax burden year-round.
Bulletproof Compliance
Our rigorous quality control ensures your filings are accurate, minimizing audit risk.
Dedicated Advisory
You get a dedicated partner who understands your business deeply, not just a once-a-year tax preparer.
CRA Audit & Appeals FAQs
Straight answers to high-stakes tax controversy questions.
Don't Face the CRA Alone.
Time is critical. Whether you just received an audit letter, a massive reassessment, or want to make a voluntary disclosure, you need expert CPA representation immediately.