Canada: Audit

The perception that Internal Revenue Service enforcement is stronger than Canada Revenue Agency enforcement is common among taxpayers and advisors, particularly in cross-border contexts.

The Scientific Research and Experimental Development (SR&ED) tax incentive program remains Canada’s most significant federal support mechanism for innovation, providing billions annually in SR&ED tax credits to businesses conducting qualifying research and development activities.

Employer Health Tax Ontario (EHT) is a critical provincial payroll tax that continues to generate significant tax audit disputes and litigation risk for Ontario employers. As businesses grow, restructure, or adopt more complex payroll and corporate arrangements, exposure to an Employer Health Tax reassessment increases materially.

The Canada Revenue Agency (CRA) is increasingly adopting advanced digital tools and artificial intelligence (AI) analytics to enhance tax compliance and enforcement.

From 2020 to 2025, the Canada Revenue Agency (CRA) has significantly increased the use of administrative penalties as a core enforcement tool.

A CRA Notice of Reassessment sets out the Agency's position and the amount now assessed. The immediate question is what happens next.

From 2020 to 2025, the Canada Revenue Agency (CRA) has significantly increased the use of administrative penalties as a core enforcement tool.

The Canada Revenue Agency (CRA) has expansive powers to enforce compliance with the Income Tax Act, notably through Section 231.2, which allows the agency to demand documents or information from individuals or entities during a tax audit.

Subsection 231.1(1) of the Income Tax Act (ITA) outlines the powers of CRA during a tax audit or examination. Before the legislative changes in 2022, the text read as follows...