Tax & Trade Blog

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AUDIT INQUIRIES REQUIRE CAREFUL RESPONSES

THE STAKES ARE HIGH WHEN CRA REACHES OUT. DO NOT WAIT TO SEEK LEGAL HELP!

In the lifecycle of every large corporation, receiving an Audit inquiry from the Canada Revenue Agency (CRA) is not a matter of if, but when. Whether it arrives as a formal “Request for Information” or a polite introductory letter from an Auditor, this document acts as the first shot across the bow.

A business’s first response to an Audit inquiry has huge implications for the scope and duration of the ensuing Audit. It also carries implications for the taxpayer’s future liability for taxes, interest and potential penalties. In fact, at the very start of just about any kind of CRA inquiry, the stakes are often higher than most understand.

In this Tax Audits 101 Series Report, we discuss these initial Audit inquiries, why the stakes are so high, and why immediately seeking Experienced Tax Counsel can minimize negative consequences.

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CRA HOME "BUILDER" AUDITS USING MLS DATA!

THIRD-PARTY RESOURCES TAKING CRA AUDITS TO THE NEXT LEVEL

As we have previously written here, the Canada Revenue Agency (“CRA”) has significantly expanded its audit activity in the residential real estate sector – particularly targeting homeowners and renovators as “builders” for GST/HST purposes, triggering tax on the sale of homes following substantial renovation (and parallel income tax exposure).   In another troubling trend, CRA is now using third-party sources like MLS Listings to rebut taxpayer positions that these homes were intended as personal residences – often to great surprise and disappointment of the "builders".

Real Estate Audits & Use of Third-Party Sources

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TAX LITIGATION 201: CHOICE OF VENUE

NOT ALL CRA DISCRETIONARY DECISIONS GO TO FEDERAL COURT!

Since the Supreme Court of Canada’s 2024 decisions in Iris Technologies and Dow Chemical, many taxpayers and tax practitioners have become well aware that the Tax Court of Canada is not a ”one-stop shop” for tax disputes. 

The rule of thumb for "jurisdiction" is that most tax cases go to the Tax Court of Canada, but that CRA discretionary decisions must be challenged in the Federal Court.

As we see in the Ingredion case dealt with below, that may not ALWAYS be the case – and it introduced a third possible jurisdiction in some cases:  Provincial Superior Courts!

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TAX OBJECTION DECISIONS TAKING LONGER

POST COVID, CRA APPEALS BRANCH SLAMMED WITH NEW WORK!

The Canada Revenue Agency (CRA) recently released its 2025-26 Departmental Plan (“the Report”), outlining its priorities and recent performance.  It reveals a critical piece of information that should serve as a warning for all taxpayers: the CRA is being overwhelmed by Notices of Objections (“NoOs”) and is struggling to keep up.

As we report on below, large businesses with complex tax issues are likely to suffer the most.

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ENABLERS TARGETED BY CRA & CBSA ALIKE

RECENT ACTION ON CAR THEFTS EASILY TRANSLATES TO TAX & CUSTOMS MATTERS

Recent news reports about Project Chickadee – the OPP and CBSA joint project aimed at dismantling organized car theft rings exporting stolen Canadian vehicles overseas – focused on an effort to target not only the direct causes of these thefts (the gangs stealing the vehicles), but also the ENABLER:  freight forwarding companies, shipping companies, and other intermediaries effectively aiding and abetting the process.

The Canadian government’s ability to intervene in situations that it does not ultimately like (i.e., tax schemes, GST shams, tariff fraud) knows no bounds.   And the government’s response does not always require joint work with the OPP or RCMP, but can come in much more innocuous ways. 

In this report, we examine a couple of ways in which Canada Revenue Agency (“CRA”) and Canada Border Services Agency (“CBSA”) can target persons indirectly associated with GST or customs non-compliance.