The Federal Government recently granted new, expanded powers to Auditors from the Canadian Revenue Agency. There are 2 major changes you should be aware of:

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CRA Auditors can obtain or compel information and documents from any person or company

CRA Auditors can compel any person or company to provide documentation or information that the Auditor reasonably believes to be relevant to their audit. This means Auditors can obligate you or your company to hand over information if they think it’s relevant to their audit. This can apply to you even if you are not part of the audit.

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CRA Auditors can obligate or compel any person to provide information under oath

With these new powers, CRA Auditors can obligate any person to provide oral information under oath if the Auditor reasonably believes that person to have information relevant to their audit. This means that a CRA Auditor can legally insist you to provide information that they believe to be relevant under oath, which may later be used against you.

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What does this mean for you or your business?

As a result of these new powers, you are more likely than ever before to be contacted by a CRA. Auditors can and will compel you to provide information and documentation, but that does not mean you should immediately hand everything over.

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In fact, if a CRA Auditor contacts you, the first call you should make is to your tax lawyer. You should make that call sooner, rather than later, even if the audit is not about you or your business, and certainly before responding to the CRA.

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While you may believe you are being helpful by providing all documentation requested, and answering all the CRA’s questions asked, this ‘helpfulness’ may in fact cause you more harm than good. The answers and documentation you provide may create confusion, leading to more questions, or lead the auditor to become more interested in your greater tax situation. Regardless, the Auditor will now be looking at you more closely.

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No one should ever be providing answers to any government body under oath without a lawyer present. As a tax disputes lawyer who deals extensively with the CRA, I help control the narrative and flow of information, ensuring that the CRA’s questions are suitably answered in the language of tax, understandable to the CRA Auditors and Appeals Officers. I also ensure the questions the CRA Auditor is asking are proper, relevant, and within what can correctly be asked of you.

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While your accountant can and usually is a great help, given the expanded powers of the CRA Auditors, we encourage everyone to consult a tax lawyer before speaking with the CRA.  

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