What’s inside the tax auditor's playbook?

The CRA’s Income Tax Audit Manual can be a big help to practitioners, but, at over 1,200 pages, it can overwhelm. CPA Canada’s new resource highlights some especially useful sections. Anything we’ve missed? Tell us.

What are the Canada Revenue Agency (CRA)’s expectations for staff conducting tax audits? What instructions do auditors follow when requesting taxpayer information? What factors are in play when setting penalties? What documents in the CRA’s files are available to tax practitioners on request?

The CRA’s Income Tax Audit Manual answers these questions and more. The manual consolidates, in one volume, the CRA’s operational policies and procedures for the administration of income tax.

Inside the tax auditor’s playbook, you’ll find:

  • examples of audit checklists and working papers
  • specific audit techniques
  • sample letters
  • technical information to apply legislation administered by the CRA
  • sector profiles that describe business operations
  • references to court cases

For tax practitioners, knowing the CRA’s audit road map can help in a variety of ways. The information can help you understand what to expect during an audit. You can find out what factors CRA auditors are expected to consider when assessing, among other things, taxpayer risk, fairness requests, the handling of late-filed elections, and the opening of statute-barred returns. You can learn what types of reports you can request from the CRA’s audit files and what guidance CRA auditors are expected follow when requesting tax information from taxpayers, their advisors and other third parties. Knowing this information may help you determine whether a particular audit is being conducted accordingly.

Extra level of transparency

Most importantly, the Income Tax Audit Manual offers an extra level of transparency, opening opportunities to build better relationships between tax advisors and CRA auditors by improving their shared understanding of the tax audit process.

Given the volume of information and level of detail in the manual, using it to support your clients on audit can be daunting. To help you, CPA Canada has developed the resource Income Tax Audit Manual – Highlights for Tax Practitioners. This document features descriptions of the manual’s chapters, listed below, and how practitioners might find this information useful.

Special recognition and thanks go to Bill Dobson and Joseph Petrie for their efforts in developing this important resource.

Keep the conversation going

I want to hear from you. Do you refer to the CRA’s Income Tax Audit Manual when supporting your clients on audit? Have you found any information in the manual useful in your practice that we could add to the Highlights list? You can keep the conversation going by posting a comment below.

Income Tax Audit Manual – Contents

CPA Canada’s Tax Blog is designed to create an exchange of ideas on tax policy and practice issues, and their impact on those who practise tax. Your comments can provide helpful input into the public interest advocacy positions developed by CPA Canada.

About the Author

Gabe Hayos, FCPA, FCA, ICD.D

Vice-president, Taxation, CPA Canada