--- title: "CRA Reviews & Audits: What Triggers Them | EverStone CPA" url: https://www.everstonecpa.com/blog/cra-review-audit-small-business description: "Why small businesses get CRA letters: matching reviews, GST/income cross-checks, benchmark outliers and audit triggers — and how to respond without panic." type: guide updated: 2026-10-12 summary: "Most CRA contact is a review , an automated or desk check asking you to support specific amounts, not an audit. Files get flagged by cross-matching (slips vs returns, GST vs reported revenue), by ratios that sit far outside industry norms, and by patterns like repeated losses or 100% vehicle claims." faq_count: 7 publisher: EverStone CPA Inc., a Chartered Professional Accountant firm registered with CPA British Columbia and CPA Alberta service_area: British Columbia, Alberta, Ontario and Manitoba language: en-CA contact: info@everstonecpa.com · https://www.everstonecpa.com/book-online --- [Home](https://www.everstonecpa.com/) [Blog](https://www.everstonecpa.com/blog) CRA reviews & audits Compliance # CRA reviews and audits: *what actually triggers them, and how to respond* By EverStone CPA · Reviewed July 2026 · 8 min read Most owners eventually open a CRA envelope with dread. Usually it is a routine review, not an audit, and whether it takes two weeks or six months depends mostly on your records and response. Here is how the CRA selects small business files, and what to do when yours is chosen. **Quick answer:** Most CRA contact is a *review*, an automated or desk check asking you to support specific amounts, not an audit. Files get flagged by cross-matching (slips vs returns, GST vs reported revenue), by ratios that sit far outside industry norms, and by patterns like repeated losses or 100% vehicle claims. Respond by the deadline with exactly the documents requested; authorize your CPA so the CRA deals with them directly; and keep six years of records so any question is answerable from the file. Most CRA mail is the bottom tier. ## Reviews vs audits: know which letter you got CRA compliance has tiers. **Pre- and [post-assessment review](https://www.everstonecpa.com/cra-review-and-audit-support)s** are automated, high-volume letters asking you to support a deduction or credit. The **matching program** compares returns with slips — T4s, T5s, [T5018s](https://www.everstonecpa.com/blog/t5018-subcontractor-reporting-construction), proposing adjustments for mismatches. An **audit** examines books, records and sometimes bank accounts over one or more years. Complete records and consistent filings underpin every response. ## What actually flags a small business file - **Slip mismatches.** The matching program is arithmetic, not judgment: a [T5018](https://www.everstonecpa.com/glossary#t5018) filed by your general contractor that does not appear in your revenue, or a T5 your corporation issued that missed your T1, generates mail almost mechanically. - **GST that does not reconcile to income.** Your GST returns declare revenue; your T2 declares revenue. When the two diverge materially without an obvious reason (zero-rated sales, timing), the discrepancy is an easy query. - **Ratios outside your industry’s norms.** The CRA benchmarks expense categories against businesses in the same industry and region. A drywall company claiming triple the typical vehicle costs, or margins persistently half the sector’s, sits visibly outside the curve. - **Repeated losses.** A business that loses money year after year while the owner keeps living invites the question of whether expenses are personal or the activity is commercial. - **Absolute claims.** 100% business-use vehicles with no logbook, [home-office claims](https://www.everstonecpa.com/blog/home-office-deduction-corporation-canada) out of proportion to the home, meals claimed at full cost rather than [50%](https://www.everstonecpa.com/blog/meals-entertainment-deduction-50-percent-rule-canada) — categorical claims read as unexamined ones. - **[Shareholder loan](https://www.everstonecpa.com/glossary#shareholder-loan) balances.** A persistent debit balance in the shareholder account is a known audit theme, because the [one-year rule](https://www.everstonecpa.com/blog/shareholder-loans-canada-taking-money-out-of-corporation) turns stale balances into income. - **Refund and rebate claims.** Large or first-time GST refund claims are routinely verified before payment — fast, document-based, and entirely normal. None of these is an accusation. They are statistical flags, and a well-kept file turns a flag into a short correspondence. **Under review or audit?** We deal with the CRA for you, assemble the records and answer each request, at a fee quoted in writing. See [our CRA support](https://www.everstonecpa.com/cra-review-and-audit-support), or [ask for a quote](https://www.everstonecpa.com/book-online?service=other#enquiry-form). [Get My Fixed Quote](https://www.everstonecpa.com/book-online?service=other#enquiry-form) ## How to respond when the letter arrives **First, read what is actually being asked.** Reviews request specific support for specific lines — answer that, completely and only that. Volunteering unrelated records widens the conversation. **Second, respect the deadline.** Missing it does not pause anything; the CRA simply adjusts the return against you and moves the argument to objection, which is slower and harder. Need more time? Ask before the deadline. **Third, involve your CPA formally.** With authorization (AUT-01 through [Represent a Client](https://www.canada.ca/en/revenue-agency/services/e-services/cra-login-services.html)), the CRA deals with your accountant, and a response built on the legislative test resolves faster than a box of receipts. ## The audit posture you build in advance What shortens a review is built beforehand: bank and credit-card accounts reconciled monthly, a [vehicle logbook](https://www.everstonecpa.com/blog/vehicle-mileage-deductions-canada-business) kept in real time, subcontractor agreements behind every T5018, and [six years of records](https://www.everstonecpa.com/blog/cra-record-retention-how-long-to-keep-records) you can retrieve. That is the real case for professional [bookkeeping](https://www.everstonecpa.com/bookkeeping-abbotsford): when the CRA asks, the answer already exists, labelled, in the right period. The habit that does the most for that posture is reconciling. A reviewer works inward from bank statements and invoices, so [books reconciled monthly](https://www.everstonecpa.com/blog/bank-reconciliation-why-it-matters) put you in the position of pointing at a proof rather than reconstructing one. ## If it does become an audit Stay factual and organized, and route communication through one person, ideally your CPA. Provide what is requested on schedule, verify rather than guess, and dispute adjustments with the provision and documents, since the auditor’s report reflects the file. Most audits of well-kept files end with little or no adjustment. The costly ones are reconstructions — years of books rebuilt under deadline — decided by how records were kept. Sources - [Canada Revenue Agency — Review of your tax return](https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/review-your-tax-return-cra.html) - [Canada Revenue Agency — Business audits](https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/rc4188/what-you-should-know-about-audits.html) This article is general information for Canadian business owners and is current as of July 2026. CRA review and audit programs evolve; the flags described are common patterns, not a complete or guaranteed list. It is not tax advice; please [speak with a CPA](https://www.everstonecpa.com/book-online) before acting on anything here. About this article **EverStone CPA** Prepared and reviewed by a CPA at EverStone CPA, serving businesses in BC, Alberta, Ontario and Manitoba. [About the firm →](https://www.everstonecpa.com/about) · [Send an enquiry →](https://www.everstonecpa.com/book-online) A CRA review is handled entirely by correspondence, so your accountant’s postal code is irrelevant to the outcome. We respond to these for owners across BC, including [Vancouver](https://www.everstonecpa.com/accountant-vancouver). An audit can run for months, and the strain lands on the owner. If you would like support while it runs, [online counselling from Westpeak Wellness](https://www.westpeakwellness.com/services/individual-therapy) is available across BC. Common questions ## Frequently asked questions about CRA reviews & audits **Is a CRA review the same as an audit?** No. Reviews are routine, largely automated letters asking you to support a line or slip by a deadline. An audit examines books and records in depth. Most CRA mail is a review, and a clean, timely response usually ends it. **What are the most common review triggers for small businesses?** Mismatches between slips (T4, T5, T5018) and what a return reports; GST filings that do not reconcile to reported revenue; expense ratios far outside the norm for your industry; repeated business losses; and aggressive vehicle or home-office claims. None proves wrongdoing — they are flags that invite a closer look. **Should I respond to a CRA letter myself or through my accountant?** Either can work, but responses drafted around the actual legislative test — with the right documents and nothing extraneous — resolve faster. If a CPA is authorized as your representative (via AUT-01 / Represent a Client), the CRA deals with them directly and deadlines stop being your problem alone. **What records should I be able to produce?** Bank statements, invoices and receipts behind claimed expenses, a vehicle logbook if you claim vehicle costs, agreements behind subcontractor payments, and payroll records. The general rule is to keep records six years from the end of the last tax year they relate to. **How long do I have to respond to a CRA review letter?** The deadline matters. Miss it and CRA adjusts the return against you, moving the dispute to a slower formal objection. Ask for more time before the deadline, and send exactly the support requested, in full. **Why does a shareholder loan balance attract CRA attention?** A stale balance can become income. A lingering debit in the shareholder account is a known review theme, since the one-year rule can make it taxable. Clear it, or document a genuine loan with repayment terms. **Is a large GST/HST refund claim checked before it is paid?** Routinely, yes. Large or first-time GST/HST refunds are often verified before release, a normal document check. Purchase invoices and a GST-to-books reconciliation usually settle it within days. Two review letters look almost identical but mean different things: a [pre-assessment review](https://www.everstonecpa.com/blog/cra-pre-assessment-review-what-to-send) runs before your notice is issued, while a [request for information](https://www.everstonecpa.com/blog/cra-request-for-information-letter) usually arrives after. Once the assessment does land, [reading it line by line](https://www.everstonecpa.com/blog/cra-notice-of-assessment-explained) tells you exactly what changed. ### Keep reading [How long to keep records →](https://www.everstonecpa.com/blog/cra-record-retention-how-long-to-keep-records) [Shareholder loans →](https://www.everstonecpa.com/blog/shareholder-loans-canada-taking-money-out-of-corporation) [Fixing past returns: the VDP →](https://www.everstonecpa.com/blog/voluntary-disclosures-program-canada-fixing-past-returns)[Send a CPA a single question →](https://www.everstonecpa.com/quick-question) **Run your own numbers with the free calculators:** [estimate your incorporation savings](https://www.everstonecpa.com/incorporation-calculator) · [run a paycheque calculation](https://www.everstonecpa.com/payroll-deduction-calculator) · [GST/HST calculator](https://www.everstonecpa.com/gst-hst-calculator) [← CRA asked for backup — answering a request for information](https://www.everstonecpa.com/blog/cra-request-for-information-letter) [Dairy quota and herd accounting on the T2: a Fraser Valley farm guide →](https://www.everstonecpa.com/blog/dairy-quota-accounting-bc) ## Have a question about this? Ask free through [the quick-question form](https://www.everstonecpa.com/quick-question); a CPA replies within one business day. Need more? A 45-minute **Advice Call** is $225 plus GST, credited to your first invoice if you become a client within 60 days. Want us to take it on? [Send an enquiry](https://www.everstonecpa.com/book-online). [Ask a Free Question](https://www.everstonecpa.com/quick-question) [Book a Paid Advice Call](https://www.everstonecpa.com/advice-call) Email info@everstonecpa.com ★★★★★ “…He is very knowledgeable and has saved me tons in taxes by restructuring my group of companies — the best accountant I've worked with in the last 10 years, after switching from three different firms.” Matt Hildebrandt · Google review --- Source: https://www.everstonecpa.com/blog/cra-review-audit-small-business Prices: https://www.everstonecpa.com/pricing · Contact: info@everstonecpa.com · https://www.everstonecpa.com/book-online