Written by: Evelyn Suvajdzic, CPA, CGA
During audits, I am frequently asked by clients if the Canada Revenue Agency is entitled to the information they have requested. The Income Tax Act of Canada gives very broad powers to the CRA auditor. They are able to inspect, audit or examine any books and records belonging to the taxpayer. You must reasonably answer all questions relating to the administration of the business. They are also allowed to inspect any document belonging to any other person that contains information relating to the information found in the books and records of the taxpayer. If you are not related to the taxpayer under audit you may want to consult your accountant.
CRA auditors are permitted to make copies of any documents, including electronic documents, relating to the taxpayer. These documents may include: invoices, bills from vendors, letters, employee records and documents and any correspondence with accountants and most advisors. If, upon review, you or your advisors realize that you have made an error, you should take immediate action to rectify that error.
Business owners, managers and their advisors should be cooperative and maintain a respectful and professional manner throughout the audit process. Remember, the onus to support your claim is on you, the taxpayer, and that you are entitled to that claim.
Questions? Ask your accountant.