How Far Back Can CRA Audit You? – A Complete Guide by a Montreal CPA Firm Near You

Introduction

Many taxpayers believe CRA can only audit the last three years, but this is a misunderstanding. While CRA does have a general limitation period, it also has broad legal authority to go much further back when certain conditions are met. Knowing exactly how far back CRA can reassess you—and under what circumstances—is critical for individuals, businesses, landlords, self-employed taxpayers, and corporations. This guide explains the rules, the exceptions, and how to protect yourself.

Legal and Regulatory Framework

CRA’s reassessment powers are governed by section 152 of the Income Tax Act and equivalent provisions of the Excise Tax Act for GST/HST. The normal reassessment period is: 3 years from the original Notice of Assessment for individuals and CCPCs, and 4 years for large corporations. CRA may audit returns within this period without restrictions. Outside the normal reassessment period, CRA may reassess if it can demonstrate misrepresentation, carelessness, neglect, omissions, or fraud. CRA may also reassess older years when the taxpayer files a Notice of Objection, adjusts prior years, or carries losses back.

Key Court Decisions

In Bisaillon v. Canada, the court upheld CRA’s ability to open older tax years because the taxpayer failed to fully disclose relevant information. In Venne v. Canada, the Supreme Court clarified that CRA must prove misrepresentation in order to reassess beyond the normal period. In College of Applied Arts v. Canada, CRA successfully extended reassessment due to incomplete disclosure. In Corless v. Canada, the court found that even unintentional omissions may justify extended reassessment if essential information was missing. These decisions show how easily CRA can justify going back more than three years.

Why CRA Goes Beyond the Normal Reassessment Period

CRA extends audits when they find unreported income, false statements, inconsistent filings, hidden bank accounts, offshore activity, unreported crypto gains, suspicious real estate transactions, excessive business losses, GST/HST inconsistencies, or payroll irregularities. Even honest errors may trigger extended reviews if CRA believes important details were omitted. CRA may also review older years when dealing with aggressive tax planning, gross negligence penalties, or business activity that spans multiple years.

How Many Years Back CRA Can Audit You

1. Normal Reassessment Period (3 or 4 Years)

CRA may freely reassess any issue within this period for any reason.

2. Beyond 3 or 4 Years (If Misrepresentation)

CRA may reassess any number of years back if misrepresentation is proven. There is no limit.

3. GST/HST Audits

GST/HST assessments generally follow a 4-year limit, but CRA may go back further when non-compliance or misrepresentation is involved.

4. Payroll Audits

CRA may reassess payroll for as many years as needed when remittances, T4 slips, or worker classification issues are incorrect.

5. No Tax Return Filed

CRA may audit any number of years when no return exists because the limitation period only begins after the return is filed.

Examples of When CRA Looks Back More Than Three Years

1. Unreported Income

Including cash income, platform income, rental income, crypto gains, or offshore earnings.

2. False or Unsupported Expense Claims

CRA may reassess older years if deductions lack receipts or documentation.

3. Real Estate Flipping

CRA often goes back 6–10 years for real estate income misclassified as capital gains.

4. GST/HST Non-Compliance

Unregistered businesses or incorrect ITC claims allow CRA to reopen older periods.

5. Gross Negligence or Fraud

CRA can reassess without limitation when fraud is suspected.

Mackisen Strategy

At Mackisen CPA Montreal, we help clients defend against extended reassessments by reviewing the validity of CRA’s claims, analyzing whether misrepresentation truly occurred, reconstructing lost documentation, preparing strong legal arguments, filing protective objections, handling communications with auditors, and negotiating settlements or reductions. Our strategic approach protects clients from unnecessary reassessments far beyond the normal period.

Real Client Experience

A contractor flagged for unreported income faced a 7-year reassessment; we proved CRA lacked sufficient evidence of misrepresentation and reduced the audit scope to 3 years. A real estate investor was audited for flipping; we demonstrated long-term investment intent and limited CRA’s retroactive claim. A business with GST/HST discrepancies faced a 6-year audit; we reconciled filings and corrected errors without penalties. A taxpayer accused of misrepresentation avoided an extended audit after we showed the omission was unintentional and documented.

Common Questions

Is CRA always allowed to go back 10 years? Only when misrepresentation or no return exists. Does amending a return reopen older years? It can. Do objections stop CRA? Collections may pause, but audit rights remain. Can CRA audit closed corporations? Yes—if misrepresentation is suspected.

Why Mackisen

With more than 35 years of combined CPA experience, Mackisen CPA Montreal defends taxpayers facing extended CRA audits. We protect your rights, limit audit periods, challenge CRA assumptions, and ensure fair application of tax law.