How to Prepare for a CRA Audit in Alberta

Receiving a CRA audit letter can cause immediate anxiety, but with proper preparation, the process is manageable. Thousands of Canadian businesses are audited every year, and most audits are routine reviews rather than adversarial investigations. Here is what Calgary business owners need to know.

Why Businesses Get Audited

CRA selects businesses for audit through several mechanisms: random selection, industry benchmarking (your numbers differ significantly from industry averages), information matching (discrepancies between filings), repeated late filings, or tips and leads. Being selected doesn't mean you've done anything wrong — it means CRA wants to verify your records.

What to Do When You Receive an Audit Notice

1. Don't panic. Read the letter carefully. It will specify the tax years under review and the areas CRA wants to examine.
2. Contact your bookkeeper and accountant immediately. They can help you prepare and may represent you during the audit.
3. Gather the requested documents. CRA will specify what they want to see — typically bank statements, receipts, invoices, and financial statements for the periods in question.
4. Respond within the deadline. Ignoring the letter or missing the response deadline makes things significantly worse.

What CRA Examines

Common areas of focus include: revenue completeness (did you report all income?), expense legitimacy (are claimed deductions supported by receipts?), GST compliance (was GST collected and remitted correctly?), payroll accuracy (were source deductions calculated and remitted properly?), and record-keeping quality (are your books organised and accessible?).

How to Prepare Your Records

• Ensure all bank accounts are reconciled for the audit period
• Organise receipts and invoices by category and date
• Prepare a summary of major transactions or unusual items
• Have your financial statements and tax returns readily available
• Document your business-use calculations (vehicle, home office)

Your Best Defence Is Clean Books

Businesses with well-maintained, professionally prepared books have little to fear from a CRA audit. When every transaction is properly recorded, categorised, and supported by documentation, the audit process is straightforward. Castle Bookkeeping keeps your records CRA-ready year-round. Contact us for a free consultation.